Quantum Corp has been forced to concede some ground to the disk drive industry’s drastic over supply problems with the news that it will cut 113 jobs (2% of the workforce) and will make cost saving changes to its operational model. The PC hard disk drive manufacturer from Milpitas, California, said it needed to reduce annual expenditure by as much as $60m and plans to split its desktop hard drive business into two segments to address separately the differing requirements of the low end and high end PC markets. Pricing pressures applied by OEM PC manufacturers in the expanding, sub $1000 PC market have hit all the major disk drive makers over the past year, but Quantum, which rates itself as number one worldwide in the desktop segment, shipping 5.3 million drives last quarter, has so far avoided any significant lay-offs. Last quarter, however, the continuing oversupply in the market and consequent pressure on prices reduced Quantum’s earnings to a disappointing breakeven level and revenues fell by 24% to $1.1bn. The company runs highly successful high end disk drive and DLTtape divisions, which are reputedly still profitable and which provide 35% of the total revenues. Quantum doesn’t break down its earnings performance by division, but by deduction, the PC disk drive business must now be heavily loss making. Young Sohn, president of Quantum’s personal storage group, said these latest moves were designed to adapt the company’s business model to changes in the market by reducing the range and complexity of the product range. A spokesperson for Quantum added that the changes were intended to help the company face up to pricing levels unlike anything we’ve been used to up until now.
