Seagate revamps to stay in play

Seagate Technology has revealed a restructure plan designed to free up investment funds and help it compete in the cut-throat disk drive market.

As the continuing price war takes its toll, Seagate will buy back its software subsidiary, Seagate Software.

Seagate, which already has a majority shareholding in the company, will offer about eight million shares of common Seagate stock to minority shareholders as compensation, and is expected to incur a charge of $216m as a result.

The move will allow Seagate to sell off its 69.1 million shares in Veritas which it received when it sold its network and storage management group to the software company for $3.1bn. The proceeds from a sale could then be used to fund its core business or for further acquisitions.

Seagate claimed the reason for the buy-back was the disproportionately large number of Veritas shares compared with Seagate Software shares.

Seagate has struggled of late. Last week, it announced jobs cuts totalling 1,600 in Singapore in a bid to cut costs and reorganise global operations.

Its fourth-quarter profit of $69m was below Wall Street expectations, despite its previous profit warning.