Some news on how the competition (IBM) is doing.
Bob Gauthier
SAN JOSE, Calif. (CBS.MW) -- IBM said it began cutting 1,100 jobs in San Jose as the computer hardware bellwether prepares to transfer server disk-drive operations to sites in Japan and Mexico.
"This is a result of a restructuring of our server hard-disk-drive development and our launch of manufacturing operations," IBM spokesman Dave Berman told CBS.MarketWatch.com. "It's designed to better position us to meet changing marketplace requirements."
On Thursday, IBM (IBM: news, msgs) managers began meeting with employees affected by the cuts, who have until the end of August to try for jobs in other divisions of the company.
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"This is 1,100 positions that are being eliminated, which doesn't mean that 1,100 people will be leaving the company," said Berman. "We are providing a transition package for them and assistance in finding other work."
About 10 percent of the total IBM work force is in Northern California.
IBM said its storage systems division will remain in San Jose, Calif., the unit's worldwide headquarters.
Big Blue's tape-drive assembly operations will move from San Jose to Guadalajara, Mexico. Its server-disk-drive business will be transferred to Fujisawa, Japan.
Other operations are going to sites in Mexico and Hungary, Berman said.
"It's critical to find the most economical ways to manufacture these drives, and the fact that IBM has put an increasing emphasis on this whole area -- technology, disk drives and storage -- made this virtually inevitable," said Laura Conigliara, an analyst at Goldman Sachs.
In 1998, IBM posted revenue $4.2 billion from its disk-drive business.
"The largest part of the IBM population is in the storage systems division, so it's still a very robust, vital operation that is contributing significantly to IBM," Berman said.
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