WESTERN DIGITAL STAFF REDUCTIONS

Western Digital is looking to reduce operating costs by some $800 million annually. WD lost $487 million last quarter which is motivating the cost control. WD has been forced to layoff some 350 persons starting in May 2019.

WD announced it would layoff a total of 313 from May 7, including 102 in Irvine, Orange County; 114 in Milpitas; and 97 in San Jose. Affected employees were notified last week.

Some contraction in the number of disks produced  due to enterprises focusing more on high-capacity nearline disks and SSD cannibalisation of performance enterprise and notebook disk drives. WD SSD sales have also been lackluster mostly due to competition.

Many new laptop machines now are sold with small capacity SSD products. These compete with 1TB hard disks in some basic models. Many hard disks are now sold with a USB case for backups.

SSD price erosion has been more rapid than hard disks which has been a problem for the industry generally. Our Intel SSD launched at $99 but we found one discounted heavily with NewEgg shortly after it became widely available. We expect that the 1TB version will erode to $99 by the end of the year.

WD has been bouncing from profit and loss over the last couple of years so the reductions are necessary to keep the company viable in the long run. WD is a global corporation with sales all over the world.