The why behind: Seagate to Cut 3,000 Jobs, Faces Charge of Violating Sanctions
https://www.bloomberg.com/news/articles/2022-10-26/seagate-to-cut-3-000-jobs-in-restructuring-as-demand-slows?leadSource=uverify%20wall
[quote][c=000000]Seagate to Cut 3,000 Jobs, Faces Charge of Violating Sanctions
Hard drive maker forecasts lowest-revenue quarter since 2005
US accuses Seagate of violating export rules, which it denies
By
Ian King and
Brody Ford
October 26, 2022 at 5:16 AM PDTUpdated onOctober 26, 2022 at 6:57 AM PDT
Seagate Technology Holdings Plc, the biggest maker of computer hard drives, said it’s eliminating about 3,000 jobs and that big buyers of technology are cutting orders on concerns the economy is worsening. The shares fell more than 10% as trading got underway in New York. They have lost more than half their value this year.
“Global economic uncertainties and broad-based customer inventory corrections worsened in the latter stages of the September quarter, and these dynamics are reflected in both near-term industry demand and Seagate’s financial performance,” Chief Executive Officer Dave Mosley said in a statement. “We have taken quick and decisive actions to respond to current market conditions and enhance long-term profitability, including adjusting our production output and annual capital expenditure plans.”
Separately, Seagate said it has been accused by the US Commerce Department of violating US export rules by selling hard drives to a sanctioned entity. Reuters reported that the entity was Huawei Technologies Co. The company denied it violated the rules.
The US company’s push back may prove a test of tightening restrictions against the provision of technology to China by the Biden administration, which has cited national security concerns in actions it’s taken against companies such as Huawei. Most of the actions to date have focused on semiconductor technology.
“Seagate’s position that it did not engage in prohibited conduct as alleged by the Bureau of Industry and Security, because, among other reasons, Seagate’s HDDs are not subject to the Export Administration Regulations,” the company said in a regulatory filing.
The company also released fiscal first-quarter financial results, which missed analysts’ expectations. Sales in the period ended Sept. 30 were $2.04 billion, missing analysts’ average estimate for $2.12 billion, the Fremont, California-based company said in the statement early Wednesday. That compares with an average analyst estimate of $2.2 billion. Adjusted earnings per share were 48 cents, far below estimates for 75 cents.
For the current quarter, Seagate said it sees revenue of about $1.85 billion and adjusted earnings per share of about 15 cents. It would mark the first quarter below $2 billion in revenue since 2005.
Company forecasts quarterly sales of less than $2 billion
Like many of its peers in the computer component industry, Seagate has already warned investors that demand is drying up after several quarters of rapid growth. Companies and government departments are slowing their investment in computer networks, causing a buildup in unused parts. Covid lockdowns alongside economic weakness in China weighed on demand for mass capacity storage in recent months, while inflation dampened spending, the company said in a presentation.
“Customers have grown more cautious with their spending plans, which we believe will extend the recovery in the calendar year ‘23,” Mosley said on a call with investors. The CEO cited interest rates, inflationary pressures, and geopolitical dynamics as contributing to an “intensely challenging macro environment.”
Seagate’s announcement is the latest from a tech company to focus on staffing expenses to cope with an economic slowdown and a squeeze on spending from high inflation. Intel Corp. is planning thousands of job cuts, while Meta Platforms Inc. plans to reorganize teams and reduce headcount for the first time ever. Amazon.com Inc. has frozen corporate hiring in its retail business, and Alphabet Inc.’s Google is making job cuts to Area 120, its in-house incubator for new projects.
Mosley said Seagate’s job cuts, which amount to about 7.5% of total employees, would lead to annualized savings of about $110 million once they were fully realized, in the fiscal third quarter of 2023.
Operating expenses were trimmed in the quarter by lower compensation and “strong controls over discretionary spending,” said Chief Financial Officer Gianluca Romano during the earnings call. Expenses are expected to decline a further $10 million in the current quarter due to the restructuring plan, Roman said.
(Updates with opening shares and earnings outlook in sixth paragraph)[/c][/quote]
Now look at why this is happening
https://tekdeeps.com/mass-layoffs-hamper-chinas-semiconductor-industry/
[quote][c=000000]At the beginning of October, the United States of America introduced expanded export restrictions against China, which may set back the recovery of the Chinese semiconductor industry for many more years. The new rules may cause a painful wound at several points, primarily to Chinese chip manufacturing, which is trying to catch up with the involvement of enormous resources, which will thus find it even more difficult to catch up with its multi-year technological lag, the experts believed at the time of the announcement.
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The new regulation basically prohibits the export of all types of equipment and production lines used in the semiconductor industry containing American technology and supporting the production process in any way to China, even if the equipment itself is not a product of an American company (such as the Dutch ASML). Furthermore, while the measure has so far affected only a few Chinese manufacturers (such as the largest Chinese semiconductor manufacturer, Semiconductor Manufacturing International Corporation, i.e. SMIC), it now applies generally to all Chinese-owned companies on the US Entity List .
In addition, any American citizen or legal entity can only work for a Chinese plant with a special permit from the Ministry of Commerce, otherwise this has also become prohibited, which mainly affects dual citizens educated in America. For violating the sanctions, the justice department of the states can arrest the person.
Jordan Schneider, Rhodium Group’s senior analyst, says so based on local reports writes, that Chinese semiconductor production practically stopped after Biden essentially forced Americans working for China to choose between their jobs or American citizenship. Therefore, most of the American managers and engineers resigned, which caused serious disruption overnight.
The Financial Times reports that US companies such as Lam Research, Applied Materials and KLA Corporation have taken immediate measures to comply with the new rules. Lam Research has begun furloughing workers from Chinese memory chip maker Yangtze Memory Technologies Corp. and has told employees to stay away from Chinese manufacturing firms for the time being.
In a letter, the Dutch multinational ASML said that ASML’s US employees, whether directly or indirectly, should refrain from serving, shipping or supporting customers in China until further notice.
According to the spokesperson of the Chinese Semiconductor Industry Association, the measures will also have a negative impact on global supply, as they create an uncertain atmosphere and undermine trust, and the tension between the US and China continues to increase. In August, Joe Biden signed the “Chips and Science Act”, a law encouraging investments in the American semiconductor industry, which provides a total of 52 billion dollars in state subsidies to local and foreign companies that want to invest in the industry. At the same time, the granting of support does not mean that American production can immediately achieve a significant increase in volume, the construction of the complexes and the achievement of full production capacity will take several years.[/c][/quote]
Expect more of these types of layoffs throughout the technology industry.
To those that refuse to accept the nature of this world.
What affects on one side of the world has consequences on the other side of the world. There is no denying this. This is not just Joe Bidens fault. The economic consequences should have been expected though.
Giving in to China isn't a good thing economically anymore than imposing this these laws. For down playing the problem of China makes us dependent on them for their cheap labor. Which is the problem to begin with.
Expanding our own technology jobs should have been done decades ago (yes even under Regan, both Bush's and Trump. And that is the result of the one world deniers.
It's also why I despise those same presidents for allowing the corporate world to become international.
So you don't want a one world government, yet you also want freetrade. You simply can't have one without the other.
Those presidents started it. The democrats only allowed it to continue because they had no choice. You either follow the one world government or you just can't get anything done.
That is the way things are. So keep up this corporate world republicans. You'll get exactly what you most fear!
You give one concept (corporations) unlimited power (free trade), then you just can't expect them to not take over.
A one world government run by corporations.
[quote][c=000000]Seagate to Cut 3,000 Jobs, Faces Charge of Violating Sanctions
Hard drive maker forecasts lowest-revenue quarter since 2005
US accuses Seagate of violating export rules, which it denies
By
Ian King and
Brody Ford
October 26, 2022 at 5:16 AM PDTUpdated onOctober 26, 2022 at 6:57 AM PDT
Seagate Technology Holdings Plc, the biggest maker of computer hard drives, said it’s eliminating about 3,000 jobs and that big buyers of technology are cutting orders on concerns the economy is worsening. The shares fell more than 10% as trading got underway in New York. They have lost more than half their value this year.
“Global economic uncertainties and broad-based customer inventory corrections worsened in the latter stages of the September quarter, and these dynamics are reflected in both near-term industry demand and Seagate’s financial performance,” Chief Executive Officer Dave Mosley said in a statement. “We have taken quick and decisive actions to respond to current market conditions and enhance long-term profitability, including adjusting our production output and annual capital expenditure plans.”
Separately, Seagate said it has been accused by the US Commerce Department of violating US export rules by selling hard drives to a sanctioned entity. Reuters reported that the entity was Huawei Technologies Co. The company denied it violated the rules.
The US company’s push back may prove a test of tightening restrictions against the provision of technology to China by the Biden administration, which has cited national security concerns in actions it’s taken against companies such as Huawei. Most of the actions to date have focused on semiconductor technology.
“Seagate’s position that it did not engage in prohibited conduct as alleged by the Bureau of Industry and Security, because, among other reasons, Seagate’s HDDs are not subject to the Export Administration Regulations,” the company said in a regulatory filing.
The company also released fiscal first-quarter financial results, which missed analysts’ expectations. Sales in the period ended Sept. 30 were $2.04 billion, missing analysts’ average estimate for $2.12 billion, the Fremont, California-based company said in the statement early Wednesday. That compares with an average analyst estimate of $2.2 billion. Adjusted earnings per share were 48 cents, far below estimates for 75 cents.
For the current quarter, Seagate said it sees revenue of about $1.85 billion and adjusted earnings per share of about 15 cents. It would mark the first quarter below $2 billion in revenue since 2005.
Company forecasts quarterly sales of less than $2 billion
Like many of its peers in the computer component industry, Seagate has already warned investors that demand is drying up after several quarters of rapid growth. Companies and government departments are slowing their investment in computer networks, causing a buildup in unused parts. Covid lockdowns alongside economic weakness in China weighed on demand for mass capacity storage in recent months, while inflation dampened spending, the company said in a presentation.
“Customers have grown more cautious with their spending plans, which we believe will extend the recovery in the calendar year ‘23,” Mosley said on a call with investors. The CEO cited interest rates, inflationary pressures, and geopolitical dynamics as contributing to an “intensely challenging macro environment.”
Seagate’s announcement is the latest from a tech company to focus on staffing expenses to cope with an economic slowdown and a squeeze on spending from high inflation. Intel Corp. is planning thousands of job cuts, while Meta Platforms Inc. plans to reorganize teams and reduce headcount for the first time ever. Amazon.com Inc. has frozen corporate hiring in its retail business, and Alphabet Inc.’s Google is making job cuts to Area 120, its in-house incubator for new projects.
Mosley said Seagate’s job cuts, which amount to about 7.5% of total employees, would lead to annualized savings of about $110 million once they were fully realized, in the fiscal third quarter of 2023.
Operating expenses were trimmed in the quarter by lower compensation and “strong controls over discretionary spending,” said Chief Financial Officer Gianluca Romano during the earnings call. Expenses are expected to decline a further $10 million in the current quarter due to the restructuring plan, Roman said.
(Updates with opening shares and earnings outlook in sixth paragraph)[/c][/quote]
Now look at why this is happening
https://tekdeeps.com/mass-layoffs-hamper-chinas-semiconductor-industry/
[quote][c=000000]At the beginning of October, the United States of America introduced expanded export restrictions against China, which may set back the recovery of the Chinese semiconductor industry for many more years. The new rules may cause a painful wound at several points, primarily to Chinese chip manufacturing, which is trying to catch up with the involvement of enormous resources, which will thus find it even more difficult to catch up with its multi-year technological lag, the experts believed at the time of the announcement.
ad
The new regulation basically prohibits the export of all types of equipment and production lines used in the semiconductor industry containing American technology and supporting the production process in any way to China, even if the equipment itself is not a product of an American company (such as the Dutch ASML). Furthermore, while the measure has so far affected only a few Chinese manufacturers (such as the largest Chinese semiconductor manufacturer, Semiconductor Manufacturing International Corporation, i.e. SMIC), it now applies generally to all Chinese-owned companies on the US Entity List .
In addition, any American citizen or legal entity can only work for a Chinese plant with a special permit from the Ministry of Commerce, otherwise this has also become prohibited, which mainly affects dual citizens educated in America. For violating the sanctions, the justice department of the states can arrest the person.
Jordan Schneider, Rhodium Group’s senior analyst, says so based on local reports writes, that Chinese semiconductor production practically stopped after Biden essentially forced Americans working for China to choose between their jobs or American citizenship. Therefore, most of the American managers and engineers resigned, which caused serious disruption overnight.
The Financial Times reports that US companies such as Lam Research, Applied Materials and KLA Corporation have taken immediate measures to comply with the new rules. Lam Research has begun furloughing workers from Chinese memory chip maker Yangtze Memory Technologies Corp. and has told employees to stay away from Chinese manufacturing firms for the time being.
In a letter, the Dutch multinational ASML said that ASML’s US employees, whether directly or indirectly, should refrain from serving, shipping or supporting customers in China until further notice.
According to the spokesperson of the Chinese Semiconductor Industry Association, the measures will also have a negative impact on global supply, as they create an uncertain atmosphere and undermine trust, and the tension between the US and China continues to increase. In August, Joe Biden signed the “Chips and Science Act”, a law encouraging investments in the American semiconductor industry, which provides a total of 52 billion dollars in state subsidies to local and foreign companies that want to invest in the industry. At the same time, the granting of support does not mean that American production can immediately achieve a significant increase in volume, the construction of the complexes and the achievement of full production capacity will take several years.[/c][/quote]
Expect more of these types of layoffs throughout the technology industry.
To those that refuse to accept the nature of this world.
What affects on one side of the world has consequences on the other side of the world. There is no denying this. This is not just Joe Bidens fault. The economic consequences should have been expected though.
Giving in to China isn't a good thing economically anymore than imposing this these laws. For down playing the problem of China makes us dependent on them for their cheap labor. Which is the problem to begin with.
Expanding our own technology jobs should have been done decades ago (yes even under Regan, both Bush's and Trump. And that is the result of the one world deniers.
It's also why I despise those same presidents for allowing the corporate world to become international.
So you don't want a one world government, yet you also want freetrade. You simply can't have one without the other.
Those presidents started it. The democrats only allowed it to continue because they had no choice. You either follow the one world government or you just can't get anything done.
That is the way things are. So keep up this corporate world republicans. You'll get exactly what you most fear!
You give one concept (corporations) unlimited power (free trade), then you just can't expect them to not take over.
A one world government run by corporations.
61-69, M
