Storage company Seagate Technology said Monday that it will lay off 10 percent of its U.S. staff — about 800 jobs — and that longtime chief executive Bill Watkins has resigned.
Stephen Luczo, chairman, will replace Watkins as CEO. Watkins has been with the company 12 years and served as CEO since 2004. He was always a colorful character, who took his employees on grueling team-building competitions in New Zealand.
We don’t know know whether he was fired or resigned voluntarily. Certainly, Seagate isn’t doing all that well right now, but then neither are a bunch of companies. In addition to Watkins, 56, chief operating officer Dave Wickersham, 52, has also resigned. Seagate has not responded to a request for comment.
I saw Watkins on Friday at the International Consumer Electronics Show (CES) in Las Vegas just three days before the announcement of his resignation. He was still his jovial self but acknowledged that the company was in the midst of restructuring and that he’d just been through a “crappy” quarter. The company reports results on Jan. 21. For 2009, he said, “It’s never as bad as we think it is, and it’s never as good as we think it is. We don’t know. Long-term, it’s great. Near-term, no. Let’s focus on what we can control: products. We don’t want to cut all spending but we don’t want to spend into a disaster either.”
Watkins has never pussyfooted when it comes to honestly describing the company’s hard times. He said in December that the economy was so weak that he was having the worst December he had ever seen, coming off a year ended June 30, 2008 that was Seagate’s best ever in revenues and profits. Things were so tough, Watkins said he was likely going to cancel Eco Seagate, the company’s grueling New Zealand event.
Watkins was expecting a couple of bad quarters and said he needed to realign capacity — which was running around 70 percent utilization — to be in line with demand.
At CES, when I talked to him, Watkins was talking about Seagate’s push into brand advertising to consumers, including TV ads aimed at educating mass market consumers about the importance of backing up their data. Data shows that only 17 percent of users actually back up their data, even though more and more people are storing precious photos and home vidoes only on their computers.
At CES, Seagate introduced a new FreeAgent Theater HD media player, which is an external backup drive with a dock that connects to a TV. Consumers can use it to view slide shows and videos or listen to music on their flat-screen TVs. It’s a lot like Western Digital’s WD TV. Watkins said the company was working on simplifying the experience of showing slide shows on the TV. You can, for instance, transfer a music file and photos into the same folder and the Seagate product will automatically play the music during a slide show.
Watkins said he told his designers to create the product with his sister in mind as their target audience — she’s a teacher in San Jose and isn’t fluent with technology.
“We’re trying to learn our way through this,” Watkins said about the consumer push. “Based on our market share in December, it’s working. We are learning, sometimes the hard way.”
Luczo is the former CEO and may run the company temporarily. I would expect that Seagate will seek a permanent CEO later on.
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