LAKE FOREST, Calif. (AP) -- Hard drive maker Western Digital Corp. said Tuesday it plans to cut 2,500 jobs, or about 5 percent of its global work force, and will reduce executive pay in response to weakening demand for its products linked to the economic turmoil.
Western Digital said demand for the current quarter is "significantly below" what it expected when it issued revenue guidance in October. The company now expects fiscal second-quarter sales of $1.7 billion to $1.8 billion, with a "consequent reduction in operating results."
Its prior sales outlook was $2.03 billion to $2.15 billion. Analysts, on average, are expecting sales of $1.98 billion, according to a poll by Thomson Reuters.
The company plans to reduce compensation by an unspecified amount for its executive officers, board of directors and senior management.
Western Digital will also stop its manufacturing operations from Dec. 20 through Jan. 1, reduce manufacturing hours by 20 percent through employee attrition and trim its use of temporary workers and overtime shifts. It is also closing one of its three hard drive factories in Thailand and will close or sell one of two facilities in Malaysia.
The measures, expected to be completed by the end of March, are expected to save about $150 million a year. Western Digital expects to take related charges of $150 million in the fiscal second and third quarters.
"(We) expect demand weakness to last well into the middle of the 2009 calendar year," said President and Chief Executive John Coyne in a statement. "Consequently, we are taking additional steps to immediately reduce production capacity and operating expenses on a longer-term basis across our entire business as we approach the seasonally weaker second half of our fiscal year."
The company will also slash capital spending for fiscal 2009 to $500 million from $750 million.
Western Digital shares fell 32 cents, or 2.6 percent, to $12.18 in morning trading. The stock is down about 57 percent year-to-date.