Seagate To Cut Another 6,500 Jobs, Raises Q4 Revenues View; Stock Surges

(RTTNews) - Seagate Technology Plc. (STX) said Monday that it plans to reduce its global headcount by about 6,500 employees or 14% of its global headcount by the end of fiscal year 2017. It raised its revenues guidance for the fourth-quarter.

STX closed Monday's trading at $24.09, up $0.08 or 0.33%. In the after-hours trade, the stock further gained $3.14 or 13.03 percent.

The company expects to report HDD unit shipments of about 37 million, reflecting approximately 62 exabytes, average capacity per drive of 1.7 terabytes and average selling price per unit of $67 for the fiscal fourth quarter 2016.

Seagate expects to report revenue of approximately $2.65 billion, gross margin of 25% and non-GAAP gross margin of approximately 25.8% for the fiscal fourth quarter 2016. Analysts polled by Thomson Reuters expect the company to report revenues of $2.32 billion for the fourth-quarter. Analysts' estimates typically exclude special items.

These preliminary results compared to the Company's previous forecast for fiscal fourth quarter 2016 revenue of approximately $2.3 billion and non-GAAP gross margin of approximately 23%. The difference in the Company's revenue from its forecast was driven primarily by better than expected demand for the Company's HDD product portfolio.

The difference in the Company's gross margin from its forecast was driven by better than expected demand for the Company's enterprise HDD portfolio and cost containment execution. Non-GAAP operating expenses for the fiscal fourth quarter are expected to be approximately $440 million, in line with forecast expectations.

In addition to the company's restructuring actions announced June 29, 2016, the company announced today an additional restructuring plan for continued consolidation of its global footprint across Asia, EMEA and the Americas. The plan included reducing the Company's global headcount by approximately 6,500 employees, or 14% of its global headcount by the end of fiscal year 2017. The total pretax charges for the plan will be approximately $164 million in fiscal year 2017.

In Late-June 2016, Seagate Technology said it would cut 1,600 jobs or about 3% of its global workforce to curb expenses.