Storage company Syquest Technology Inc has announced that it will be restructuring its operations in the face of another poor quarter. The Fremont, California maker of removable cartridge hard drives said that to bring costs in line with demand it would be scaling back across the board. Syquest will cut nearly 50% of its 1,000-strong […]
Storage company Syquest Technology Inc has announced that it will be restructuring its operations in the face of another poor quarter. The Fremont, California maker of removable cartridge hard drives said that to bring costs in line with demand it would be scaling back across the board. Syquest will cut nearly 50% of its 1,000-strong workforce in a move that will end all manufacturing at the Fremont location. It will also cut back on administrative, sales and marketing and research expenditures and look to implement other cost-cutting moves. Things have been tough in the overall storage industry for some time, with Syquest’s main competitor Iomega Corp announcing in June that it would be cutting staff by about 14% to realize cost savings of about $50m in the second half of this year (CI No 3,435). News of the restructuring at Syquest comes at the same time the company has warned that revenue for the third quarter ended June 30 will see revenues down from the preceding quarter and operating losses slightly higher. For the second quarter, net losses were $31.5m on revenue of $47m. The September quarter will be hit even harder, with revenue also down sequentially and the inclusion of charges associated with the restructuring. The size of the charges has yet to be determined. The December quarter is expected to see revenues that reflect seasonal strength, although the company would not offer further guidance on that front or predict any operating profit. The company said that the restructuring will allow it to reduce expenses to less than half their previous level. Syquest will continue to focus on its SparQ 1.0 Gb product, which it claims has been met with high retail demand and enjoys a 50% market share within its product category. Success in the retail space isn’t enough, however, and Iomega has a head start on getting its competing Zip and Jaz products into hardware through OEM deals. Syquest has claimed a couple such deals, including one with Compaq Computer Corp that will see SparQ included in the company’s build-to-order program (CI No 3,429). It promises that the leaner company will continue working on that front, although it wouldn’t give any specifics on any deals that may be in the works.