Seagate mandates longer unpaid furloughs during the holidays

Hard drive maker expects dramatically lower revenues for the quarter

After announcing this week that it is cutting revenue expectations for the current quarter, Seagate Technology expanded a companywide unpaid holiday furlough from one to two weeks.

The holiday furlough policy has been in place for "many years but usually is a week long," according to a spokesman for the hard drive maker. "The difference this year is that it has been extended to two. The furlough extension is unrelated to production."

Workers in the US are being asked to take time off from Dec 22 through New Years, and they can take unused vacation time that will be be paid during the break.

Seagate said it's revenue for the current quarter would be in the range of US$2.3 billion to $2.6 billion, about 17 percent less than its earlier forecast in October of US$2.85 billion to $3.05 billion.

"As we got through the October into November [period], I think people really started taking a hard look at their inventories and where they are and the risk profiles that people were building. And as demand fell down way, way below what our expectations were for the quarter, the industries specifically to what we're in, hard drives, got very aggressive on pricing," Seagate CEO Bill Watkins said , during a speech at this week's Barclays Capital Global Technology Conference.

"I'm not here blaming any particular company; I think we all have our fingerprints on this dead body. But we've [gotten] very aggressive on pricing here as an industry," he added.

Seagate's revenue downturn announcement was foreshadowed by a report from iSupply last week that disk drive sales would drop by as much as 10 percent this quarter over last. As few as 149.4 million units will go out during the current quarter, it said. ISuppli's more optimistic outlook calls for global HDD shipments of 157.5 million units in the quarter ending December 31, basically flat compared to the 158.3 million units shipped in the third quarter.

Watkins said Seagate would focus on getting its output "capacity" and its pricing "structure" in line with real demand during the next two quarters.

Retail external hard drive sales held up "fairly decent", he added, but prices tumbled. "You look at some of the price deals, there's a price deal every week in retail. So we're going to see some growth in that."

In the desktop drive market, Watkins said anything with less than 500GB of capacity is a major battleground among vendors, adding that he expects Seagate to lose share in the 3.5-in. hard drive market, including drives for desktop PCs and digital video recorders.

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