Seagate replaces CEO, plans to cut 800 workers

SAN FRANCISCO - Seagate Technology has replaced its top two executives and said it plans to cut 800 jobs -- 10 percent of its U.S. work force -- as the hard drive maker endures a bruising slowdown in technology spending. Its stock fell more than 15 percent.

In a surprise move, the Scotts Valley-based company announced Monday that William Watkins, 56, Seagate's chief executive since 2004, and Dave Wickersham, 52, the president and chief operating officer, had both left the company, effective immediately. Seagate declined to make either executive available for comment.

The company also announced that it plans to cut 10 percent of its 8,000 U.S.-based workers. It has 53,000 workers worldwide.

A familiar face will fill the CEO slot. Stephen Luczo, 51, a former investment banker who served as Seagate's CEO from 1998 until 2004 amid a wrenching restructuring, will have to engineer another big turnaround to get the company back on track.

Wickersham's jobs will be taken by Robert Whitmore, 46, Seagate's executive vice president and chief technology officer.

Seagate is the world's largest maker of computer hard disk drives, with more than 30 percent of the global market. But its business has suffered badly because of the economic meltdown, which has sapped information-technology budgets and demand for new personal computers and servers that use Seagate's products.

Oversupply in the industry has also hurt Seagate and other disk drive manufacturers.

Luczo takes the reigns of a company whose stock price plunged more than 80 percent last year and that warned in December its fiscal second-quarter results would fall far below Wall Street's expectations. Seagate lowered its guidance for sales in the period by about $500 million, cautioning that slumping demand and price pressures were hurting the company more than it had anticipated.

Seagate, which is scheduled to report its full quarterly results Jan. 21, expects revenue of $2.3 billion to $2.6 billion. Its previous guidance was for $2.85 billion to $3.05 billion. Analysts surveyed by Thomson Reuters expect sales of $2.5 billion and a loss of 2 cents per share.

The same trend can be seen at other big computer-industry suppliers like Intel Corp., the world's biggest microprocessor maker, which had to lower its fourth-quarter revenue guidance twice as sales evaporated faster than expected. Intel reports its fourth-quarter results Thursday.

Ashok Kumar, an analyst with Collins Stewart, said Seagate has struggled recently because of its seesaw battle for market share with rivals like Western Digital Corp. and being late to incorporate some new technologies into its products.

"In the last two years, they lost their technology footing, and they went from a leader to a laggard, and that probably caused a disproportionate amount of pain for Seagate," he said. "There's always a fall guy, and in all fairness (Watkins) was well regarded in the industry."

Kumar called Luczo an "old hand" whose turnaround experience makes him a solid choice to lead the company again. He noted, however, that the sudden change of command has rattled Seagate investors.

Seagate shares fell 88 cents, or 15.6 percent, to close at $4.76 during the regular session. The stock fell another 8 cents in after-hours trading.