Seagate Revamps Management Team, Chairman Takes Over for CEO

Seagate Technology Inc. (NYSE: STX), the world's leading maker of hard disk drives, shook up its management team Monday, with chairman Stephen Luczo replacing chief executive Bill Watkins. The company also said its chief operating officer would step down. The moves come a week after the company said it would cut 10 percent of its U.S. workforce.

Seagate has lost 75.4 percent of its market value over the past 12 months, while rival Western Digital Corp. (NYSE: WDC) has fallen 42.8 percent over the same period. Brian Dexheimer, president of the company's consumer division, told Reuters last week that the poor economy has hurt the hard drive industry as a decline in spending on personal computers and other technology products in 2008 cut into sales.

In the past 15 years, Luczo has played a major management role at Seagate. He was chief executive of Seagate from July 1998 to July 2004, and was named chairman in June of 2002. He will continue to hold that post along with that of chief executive. It isn't clear what role Watkins will have with the company.

In a release, the company said Watkins will be advising Luczo in order to ensure a smooth transition. The two "will confer over the next week to determine what role, if any, Mr. Watkins will have at the company going forward."

"We are fortunate to have a leader of Steve's vision and experience," said Lydia Marshall, a member of the board, in a statement. "Steve's significant understanding of Seagate's business and technology, and the customer and employee relationships that he built over his 15 year career at Seagate make Steve the ideal person to lead our company at this time."Luczo issued a statement saying that the company is "making measurable progress toward regaining our longstanding product leadership position across all markets."

In addition, Seagate said David Wickersham resigned as president and chief operating officer, replaced by chief technology officer Robert Whitmore.

"It is hard to know whether these changes are a result of past performance or whether they represent a change in direction," said John Rydning, a research director specializing in hard disk drives at research firm IDC . "But Seagate was a very different company under Luczo than it was under Watkins. When Luczo was running the company, it was very focused on HDD technology and HDD products. He invested to improve the efficiencies of the factories. Watkins was more broadly focused on new market and the company made several acquisitions while he was running things. They had relatively few major technology announcements during that time."

Analysts raised questions about Wickersham's resignation and said there has been evidence of problems within Seagate's management team, which may have caused problems with executing its business plan in the face of mounting worldwide economic problems. "This disaffection combined with the disruption from multiple restructurings of Seagate's operations and executive teams over the past year had created a difficult operating environment, which in our view has hindered Seagate's ability to execute," Avian Securities analyst Matt Bryson wrote in a note to clients, Reuters reported.

Following the news, Seagate shares fell 61 cents to $5.03, off more than 76 percent in the past year, although as of Friday the stock was up about 10 percent in the last month.0