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Western Digital Cuts 2,500 Jobs, Scales Back Operations: Page 2 of 3

The Lake Forest, Calif.-based company also said it will close one of its three hard drive manufacturing facilities in Thailand and close or sell off one of its two media substrate manufacturing facilities in Malaysia. It also announced plans to cut capital spending for the fiscal year 2009 from $750 million to approximately $500 million.

"We are taking these actions in order to strengthen our financial position and enhance the ability of our business to withstand an extended period of depressed demand while continuing to invest in the technologies, products and processes required to assure the continued success of our business," Coyne said.

Much of the decline is attributed to the slowdown in sales of personal computers. Market researcher IDC this month cut its forecast for PC shipment growth next year to 3.8 percent. Just a few months ago, IDC had forecast a gain of 13.9 percent.

Western Digital said it should complete the cost-cutting moves by March and will take charges of $150 million over the next several quarters. It estimated savings of $150 million annually.

Last week, another storage vendor NetApp Inc. (Nasdaq: NTAP) also announced it would close a product line that experienced unexpectedly low demand, and will close a facility in Haifa, Israel, which employs 51 people, Reuters reported.