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May 25, 2006

Seagate to slash Maxtor jobs

Monday, computer disk maker Seagate closed the deal to acquire rival Maxtor. Then it announced that it will cut 6,000 jobs at Maxtor.

Rochester has a Maxtor office that opened in 2004 with 20 employees at 3535 40th Ave. N.W., in the Valleyhigh Business Center
So this might mean that Seagate could close another office in Rochester. Here's some of the back story on Seagate, Maxtor, Xiotech and Rochester.:

Maxtor came in to Rochester to fill the hole left by Xiotech’s departure, which left behind a pool of electronics engineers with expertise in computerized data storage. Xiotech specializes in storage area networks and large systems often linked to servers.

Seagate Technology Inc. initially started Xiotech's office in 2000, after the disk drive maker Western Digital Corp. closed its disk drive development lab.

The office employed about 25 workers then and grew to at least 37 by 2002. Seagate, which also makes disk drives, acquired Xiotech at about the same time.

Here's some from a story on the latest development and Seagate's planned massive job cuts at Maxtor:

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

Most of those cuts will occur in the United States. Of the 2,400 people employed by Maxtor in Silicon Valley, all but a tiny fraction will get pink slips, a Seagate spokesman said.

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, of whom just more than 2,500 work in Silicon Valley.

Seagate, which has corporate offices in Scotts Valley (Santa Cruz County) but 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 Milpitas, 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 in Los Altos, Calif. 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.


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