Hard drive maker Seagate is firing 6,500 employees and the stock is soaring
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Data storage company Seagate announced its preliminary financial results for the fourth quarter and in addition to higher than expected revenue guidance, the firm said it was cutting 14% of its workforce.
The move is a continuation of Seagate's plan to slim down the costs of its business and provide significant savings for the firm.
This is the second round of announced layoffs in a few weeks, as the firm said it was laying off 1,600 emloyees on June 29.
"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," said Seagate in a release accompanying the announcement.
"The plan includes 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."
Additionally, revenue for the firm is projected to come in at $2.65 billion for the fourth quarter, higher than both Seagate's original projection of $2.3 billion and Wall Street analysts' expectations of $2.34 billion.
The firm also expects its gross margin to be 25.8%, higher than the original projection of 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," said the release.
"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."
Seagate said it expects to ship 37 million of its hard drives for the fourth quarter.
As of 4:33 p.m. ET, the has jumped up $2.79, roughly a 11.3% leap, at $26.81 per share.
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