Hard drive maker Seagate Technology said on Wednesday it plans to cut 8% of its global workforce, or about 3,000 employees, citing economic uncertainty and declining demand for its parts.
“In addition to adjusting our production output, to drive supply discipline and pricing stability, we are implementing a restructuring plan to sustainably lower costs, including reduction in our global workforce,” Seagate CEO Dave Mosley said on a call with analysts.
The restructuring plan was announced after Seagate reported fiscal first-quarter earnings that missed Wall Street expectations for revenue and earnings per share.
Seagate shares fell more than 7% during trading on Wednesday and are down over 55% so far in 2022.
Mosley added that Seagate’s customers, which include cloud providers, have a build-up of inventory of parts because they are spending less on computers. He said he doesn’t expect Seagate’s customers to finish using up their parts backlogs in the current quarter.
The company will maintain paying a dividend, Mosley said.
Seagate makes hard drives and other parts often used in PCs and cloud servers.
Seagate’s layoffs and lower demand are the latest sign that demand for PCs and cloud servers is deteriorating after two boom years driven by the pandemic.
On Tuesday, Microsoft, which makes the operating system for most PCs, reported that Windows licensing sales dropped 15% on an annual basis. Microsoft’s cloud business also came up short versus expectations.
Seagate said that its restructuring plan, which includes the layoffs, would save the company about $110 million per year and would be completed by the end of the company’s March quarter. It said it expected to pay pre-tax charges of about $65 million, mostly for severance and other termination benefits.
Seagate reported adjusted fiscal first-quarter earnings of 48 cents per share on Wednesday, significantly below FactSet consensus expectations of 71 cents per share.
Seagate’s revenue was $2.04 billion, which also came in under the FactSet consensus of $2.1 billion.
Seagate said it expected $1.85 billion in revenue in the current quarter, under FactSet expectations of $2.12 billion.
Elon Musk embraces Republican presidential nominee and former President Donald Trump during a campaign rally at the Butler Farm Show fairgrounds in Butler, Pennsylvania, on Oct. 5, 2024.
Anna Moneymaker | Getty Images
Tesla shares popped 8% on Monday, continuing to ride a postelection rally as President-elect Trump, closely allied with CEO Elon Musk, begins to set up his presidential cabinet.
Analysts at Wedbush reiterated their “outperform” rating on the stock, joining earlier sunny outlooks reacting to Tuesday’s results. Tesla recently reclaimed its $1 trillion market cap after surging nearly 30% last week.
“We are raising our price target on Tesla to $400 from $300 as we believe the Trump White House win will be a gamechanger for the autonomous and AI story for Tesla and Musk over the coming years,” the Wedbush analysts wrote.
Musk’s wealth rocketed past $300 billion in the days since Trump’s decisive electoral win, further cementing his place as the richest man in the world and joining the wave of gains across the technology and crypto sector since post-election trading began.
It’s unclear whether Musk, who spent at least $130 million on Trump’s campaign, will receive an official title in the second Trump White House or will influence policy decisions from his inner circle.
Either way, Musk stands to earn potentially billions from new government contracts with his companies, on top of the $19 billion SpaceX has already been awarded. Some or all of the 19 known ongoing federal lawsuits and investigations into his companies may begin to wind down entirely.
“It is difficult to judge how Elon Musk’s increasingly close public relationship with President Trump could benefit Tesla, but this needs to be monitored closely,” analysts from Bank of America wrote in a note last week, raising their TSLA price target from $265 to $350.
Trump has said previously he may cut the federal $7,500 electric vehicle tax credit, and those credits have historically helped to drive sales of Tesla vehicles.
At one of his final campaign rallies, Trump suggested Musk could be put in charge of “government efficiency,” and he was present on Trump’s phone call with Ukrainian president Volodymyr Zelenskyy two days ago.
— CNBC’s Michael Bloom, Annie Palmer and Lora Kolodny contributed reporting.
Silicon Valley venture capital firm General Catalyst has made its first investment in Saudi Arabia through fintech startup Lean Technologies, which just closed a Series B round worth $67.5 million.
General Catalyst has $30 billion in assets under management and has backed major U.S. tech companies like Snap, Stripe and AirBnb. Lean Technologies’ fundraising round also saw participation from Bain Capital Ventures, Stanley Druckenmiller’s Duquesne Family Office, and Arbor Ventures, among others, bringing the Riyadh-based firm’s total funding to over $100 million to date, according to a Sunday statement from the company.
For three of those investors — General Catalyst, Stanley Druckenmiller and Bain Capital — this investment is their first in the kingdom.
What this signifies, Lean Technologies CEO and co-founder Hisham Al-Falih told CNBC, is that “this is a huge vote of confidence for their view of the growth trajectory that Saudi is on and the potential that it has over the next decade.”
The kingdom is pushing ahead with Vision 2030, its initiative to diversify its economy away from oil and create new jobs and industries for the overwhelmingly young Saudi workforce. Now more than ever, the kingdom wants foreign capital and direct investment coming into Saudi Arabia rather than flowing out of it, allowing for local employment, knowledge transfer and training, and the development of a variety of sectors.
Fintech plays a major role in this evolution, Al-Falih stressed.
“We are just getting started. I feel like there’s so much more investment that needs to go into deepening our tech stack, to expanding our payment solutions, to expanding our data services, to deepening our partnerships with banks in the region and with the support and enablement of the central banks in the region as well,” Al-Falih said. “If you look at the region’s growth over the last three to five years, it’s been phenomenal, but there is still so much more room for growth.”
Riyadh, Saudi Arabia.
Xavierarnau | E+ | Getty Images
Revenue from the fintech industry in the Middle East and North Africa amounted to $1.5 billion in 2022, and could grow to be between $3.5 billion and $4.5 billion by 2025, according to a report by McKinsey & Company. Fintech revenues in the region are less than 1% of banking revenues, Al-Falih said citing the report, compared to 4 to 5% in more mature markets like the U.S. and U.K.
“We are almost an order of magnitude away from where we could be in terms of the fintech revenue and its participation to the economy,” the Lean Technologies CEO said. “And that gives us the wind behind our sales and the motivation to keep building those tools and the picks and shovels, if you will, to enable those bold innovators to achieve their dreams.”
Lean Technologies specializes in providing the financial infrastructure that allows secure data-sharing between bank accounts and applications.Regulated by Abu Dhabi Global Markets in the United Arab Emirates, Lean works to facilitate A2A (account-to-account) payments, meaning funds transferreddirectly between two bank accounts rather than viaintermediaries like payment processors or credit card networks.
The company works with major local clients like Emirati state telecoms firm e& and ride-hailing super app company Careem, with over $2 billion in total processed volumes, according to its press release issued Sunday.
In Saudi Arabia, Lean’s “launch of its data solutions under the Saudi Central Bank’s regulatory sandbox has impacted clients across various industries, including insurance, lending, and marketplaces, verifying nearly 1 million bank accounts,” the release said.
As of September of this year, Saudi Arabia’s fintech startups have raised over $1.84 billion in venture capital investments since 2018, according to Monsha’a, the kingdom’s General Authority for Small and Medium Enterprises. KPMG in September reported that in 2023 alone, Saudi fintechs attracted $791 million — a 231% leap from the previous year.
The number of active fintech startups in the country since the launch of its “Fintech Saudi” initiative in 2018 has reached 216 and they employ a more than 6,500 people, Monsha’a said. The Kingdom aims to establish 525 new companies in the fintech sector by 2030.
The estate of collapsed crypto exchange FTX has filed a suit against Binance and its former CEO Changpeng Zhao in an effort to wrest back at least $1.76 billion, citing a “fraudulent” share deal.
In a Sunday filing with a Delaware court, FTX cites a 2021 transaction in which Binance, Zhao and others exited their investment in FTX, selling a 20% stake in the platform and a 18.4% stake in its U.S.-based entity West Realm Shires back to the company.
The FTX estate alleges that the share repurchase was funded by FTX’s Alameda Research division through a combination of the company’s and Binance’s exchange tokens, as well as Binance’s dollar-pegged stablecoin.
“Alameda was insolvent at the time of the share repurchase and could not afford to fund the transaction,” the suit claims, labeling the deal agreed with FTX co-founder Sam Bankman-Fried — who’s now serving a 25-year sentence over fraud linked to the downfall of his exchange — a “constructive fraudulent transfer.”
Binance denies the allegations, saying in an emailed statement: “The claims are meritless, and we will vigorously defend ourselves.”
The litigation marks the latest escalation of tensions between two of the biggest names in the crypto space, after the meteoric collapse of FTX rocked the industry.
Once a $32-billion empire, FTX disintegrated into bankruptcy when it was unable to keep pace with a torrent of customer withdrawals, triggering a plunge in the crypto markets.
The market fallout peaked in November last year, when Bankman-Fried was found guilty of seven criminal fraud counts relating to the bankruptcy of the exchange and theft of customer funds. That same month, Binance’s Zhao pleaded guilty to charges of violating the Bank Secrecy Act for failing to put in motion an effective anti-money laundering program and for breaching U.S. economic sanctions.
In addition to recovering funds, the latest lawsuit also accuses Zhao of “a series of false, misleading and fraudulent tweets” that it alleges “triggered a predictable avalanche of withdrawals at FTX,” eventually leading to the exchange’s collapse.
The suit cited a Nov. 6 post on X in which Zhao said, with reference to FTX token FTT: “Liquidating our FTT is just post-exit risk management, learning from LUNA. We gave support before, but we won’t pretend to make love after divorce.”
In another post cited, he said: “As part of Binance’s exit from FTX equity last year, Binance received roughly $2.1 billion USD equivalent in cash (BUSD and FTT). Due to recent revelations that have came to light, we have decided to liquidate any remaining FTT on our books.”