History (1999): StorageTek to Reduce 1,500 to 1,750 Positions

“Performance in the third quarter [ended September 24, 1999] was affected by revenue growth that was below our expectations, as well as disappointing margins in our consulting and integration services businesses,” said StorageTek’s president, CEO and COB David Weiss.

Following advice supplied by consulting firm McKinsey & Company, STK has thus decided to close down its solutions business division, which includes consulting and integration services, managed storage services and vertical and horizontal application solutions, with the exception of its consulting activities for SAN and virtual storage businesses.

Reductions in staff are also expected in its sales activity and corporate structure.

From now on, the Louisville, CO company will focus on tape automation, SAN and virtual technology.

This initial restructuring phase should entail 1,500 to 1,750 departures before the end of June 2000, roughly 20% of its total workforce, in return for what STK hopes will be $150 million in annual savings.

This restructuring wouldn’t be a bid to present the company in a more attractive light to eventual buyers, would it? Officially, StorageTek said that it is working with the investment banking firm Goldman, Sachs & Co. to look at the possibility of financial restructuring, acquisitions, divestitures, spin-offs and business combinations.

“This restructuring is a necessary and appropriate first step to optimize the options we are pursuing with Goldman Sachs,” said Weiss.

And the next step?

This article is an abstract of news published on issue 142 on November 1999 from the former paper version of Computer Data Storage Newsletter.

Note: Filed for Chapter XI bankruptcy protection in 1984, in 2005 Sun Microsystems purchased StorageTek for $4.1 billion in cash, in 2010 Sun was acquired by Oracle for $7.4 billion, the StorageTek product line was renamed Oracle StorageTek.