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Seagate to cut 10 percent of workforce, take $200 million charge in 1Q

Disk-drive manufacturer Seagate Technology Inc. (NYSE: SEG) said Tuesday it will layoff 10 percent of its workforce in the next nine months and take a $200 million charge in its first quarter.

Company officials said the cuts are aimed at creating the "factory of the future" which includes a smaller and much more technically skilled workforce.

The headcount reduction will manifest in the form of voluntary separation packages, natural attrition and flat-out layoffs.

The move comes on the heels of a disappointing fourth-quarter earnings report. Seagate missed analysts' expectations by 4 cents a share, earning $69 million, or 30 cents a share, on sales of $1.64 billion.

The earnings shortfall was even more pronounced because it issued a profit warning earlier in the quarter. Analysts reduced their profit estimates from 49 cents a share to 34 cents a share.

Lower disk-drive prices and sluggish demand were blamed for the letdown.

From an investor perspective, Seagate's been on a roller coaster ride for most of this year. Its shares peaked at 44 1/4 in January after falling to a low of 19 13/16 in October.

The stock closed down 1 1/16 to 31 15/16 ahead of Tuesday's announcement.

First Call consensus had expected Seagate to lose 9 cents a share in its first quarter. That estimate will likely be lowered following this news.

Seagate officials tried to put their best spin on the layoffs, saying the job reductions will eventually save the company $150 million a year.