Seagate To Cull 6,000 Maxtor Employees
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Disk-drive manufacturer Seagate Technology has completed its acquisition of Maxtor by saying it will fire about half of Maxtor’s 12,000-person workforce.

Disk-drive manufacturer Seagate Technology has completed its acquisition of Maxtor by saying it will fire about half of Maxtor’s 12,000-person workforce.

Most of those cuts will occur in the United States not Australia or Asia Pacific. Seagate will keep Maxtor’s new disk-drive factory in China, along with roughly 6,000 people who work for Maxtor in Asia. No Seagate employees will be eliminated. The deal leaves Seagate with a worldwide workforce of 55,000.

Seagate, is officially based in the Cayman Islands, is the world’s largest maker of disk drives for personal computers. It announced in December that it would acquire Maxtor, a rival disk-drive company, in a stock swap valued at roughly $1.9 billion. Shareholders of both firms approved the deal last week.

Mark Geenen, president of TrendFocus, a market research firm called the deal a surgical operation that cut out the expensive parts of Maxtor, while allowing Seagate to boost its manufacturing capacity. “This is a very clear-headed move,” said Geenen, describing disk drives as a commodity market that’s been great for consumers but tough on manufacturers.

In 1997, for instance, a 10-gigabyte hard-disk drive was rare and cost $650, Geenen said. Today, an 80-gig drive runs less than $50, he said. To profit amidst plunging prices, disk-drive manufacturers have been consolidating and the number of brands has been shrinking. But Seagate Chief Executive Officer William Watkins made clear Monday that this deal would not be a merger so much as a meal in which Seagate swallowed only those parts of Maxtor that made sense.

“When you announce a merger or acquisition, and intend to blend roadmaps, processes, etc. . . . you end up with two companies in turmoil,” he said Monday.

Other than the factory in China and some facilities in Singapore, what Seagate found most appetizing was Maxtor’s popular line of backup-storage products and some high-end disk-drive development being done in Colorado and Massachusetts. Fewer than 100 people in Milpitas will be retained to continue the backup-storage line, said Seagate spokesman Brian Ziel .

John Rydning, an analyst with IDC market research in Massachusetts, said even before acquiring Maxtor, Seagate had a 29 percent market share, ahead of second-place Western Digital (18 percent) and third-place Hitachi (14 percent). Maxtor had been fourth with a 12 percent share.

“While it’s painful for the people involved, it’s healthy for the industry and for Seagate and its shareholders,” Rydning said