Quantum and Exabyte To Lay Off Hundreds - InformationWeek

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Quantum and Exabyte To Lay Off Hundreds

Irvine, Calif.10:53 AM EST Fri., Aug. 20, 1999

Employment in the data storage industry took a hit late Thursday as two major vendors announced layoffs.

The Hard Disk Drive Group (HDDG) of Quantum Corp., Milpitas, Calif., will release from 750 to 800 employees over the next 12 months in an effort to cut operating costs.

The majority of the layoffs will happen at Quantum's drive configuration centers and warehouses in Milpitas, Calif., and Ireland, as customers shift orders from custom-configured to standard-configured drives, company officials said.

Another 115 people who work with unannounced product development projects also will be cut.

Quantum Chairman and Chief Executive Michael Brown in a statement cited difficult conditions in the desktop drive business as reasons for the layoffs.

"Not only are we seeing strong growth of the sub-$700 PC market and the pricing pressure created by that shift, the industry is also under pressure from competitors who are aggressively attempting to gain share based on price," said Brown. "The actions we have announced today are specifically intended to adapt our business to the market changes brought on by the rapid shift to low-cost PCs, and are not expected to offset the near-term impact of the competitive price pressures within the desktop drive industry."

Tape drive and tape automation vendor Exabyte Corp., Boulder, Colo., expects to lay off about 200 people by year-end, company officials said.

About 185 of the job reductions will occur in the company's U.S.-based operations, especially at the headquarters. The job cuts are expected to result in annual expense savings of $12 million, company officials said.

As part of a company-wide restructuring, Exabyte will reorganize into four principal groups.

The Data Storage Products Division combines the company's drive and library hardware operations into a single unit. The Storage Network and Solutions Division will develop storage management software and work with other hardware and software partners regarding storage area network and network-attached storage products. Also newly formed are a Services Division and a Sales Division.

Exabyte's revenue has been declining over the last several quarters, said Fara Yale, chief analyst at Dataquest, San Jose, Calif., and so it is logical to reduce costs.

"It makes sense to combine the library business with the tape [drive] business," Yale said. "It eliminates some redundancies, and also [creates] some synergies . . . because of the common bonds between customers of its drives and libraries."

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