Maxtor's chief exec and head of finance Paul Tufano has left the struggling company. It is not clear if he was fired or resigned.
Tufano is the fourth CFO the company has had in eight months with two previous holders resigning. All is not well in Maxtor's money department.
The time line shows a bewildering speed of events. Tufano was CFO but then got promoted to CEO in June 2003 and Robert Edwards became finance chief. Edwards resigned in March this year, eight months into the job, to join Safeway. Theodore Hull took over as acting CFO and then Michael Bless joined Maxtor on 23 August as the new CFO.
Bless then resigned on 14 October, "effective immediately, for personal reasons," a Maxtor statement said. He lasted a month and a half. It now looks like either a catastrophically bad appointment or else he really did not like what he saw once he opened the company's books and understood Tufano's direction.
Tufano took on the acting-CFO position at that point. In what looks like a summary dismissal by the Maxtor board, he's gone just one month later. Maxtor chairman C. S. Park is acting CEO while the company searches for a new CEO and CFO. What a sorry mess. If Tufano, as it appears, was a disasterous chief exec appointment, it raises questions about the people who appointed him.
Maxtor lost $91 million last quarter. Competitors Seagate and Western Digital both reported hard trading conditions in that period, which saw average unit selling prices decline. Maxtor also apparently irritated Dell, one of its most important OEMS, when it lost a contract and had to requalify drives earlier this year.
It also laid off some 450 employees in the summer because costs were running ahead of revenue. In the hard drive business PC and server drives are a commodity. This is Maxtor's main source of revenue. Seagate and Western Digital are also producing 2.5in drives but Maxtor is stuck in the 3.5in form-factor. It has no notebook or sub-notebook drives and is financially limited in its ability to move into these markets where its competitors are making the running.
Maxtor now expects to lose £40-50 million this quarter. Earlier estimates had been at half that level. Investors don't like surprises in this area and are also upset by lack of continuity in CEO and CFO positions. The company appears to be floundering and must be considered as a possible acquisition target for ambitious rivals.
On the other hand they might prefer to see it fail; the disk drive market has too much capacity which is why average selling values are so low. End-user customers should not worry. Maxtor drives can readily be replaced by competitors' products.