Seagate Technology (NASDAQ: STX), the world's top hard-disk drive maker, announced on Monday that Chairman  and ex-CEO Stephen Luczo will replace Bill Watkins as CEO, effective immediately.

The company refused to divulge much detail and said in a statement that Luczo and Watkins will "determine what role, if any, Mr. Watkins will have at the company going forward. A Seagate spokeswoman said on Monday that the board of directors "made the determination that Steve was the right person to lead the company at this time."

Watkin succeeded Luczo as CEO of the technology firm in 2004. Monday’s reshuffle came as a surprise to many. Luczo had earlier served as CEO of the company from 1998 to 2004.

“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," said Lydia M. Marshall, the board's lead director.

Additionally, David Wickersham too resigned as president and chief operating officer and was replaced by Chief Technology Officer Robert Whitmore.

Seagate also said on Monday that it will eliminate almost 10% of its workforce “Seagate plans to reduce approximately 10 percent of its U.S. workforce as part of its restructuring program. This restructuring will impact a broad range of departments, including research and development, and is being done in response to the current economic environment," the SEC filing said. Seagate employs over 54,000 people, majority of whom are in US. The company has been feeling the heat of economic downturn.

Falling demand, increased competition from Japanese rivals Fujitsu and Hitachi (NYSE: HIT) and dwindling margins have compounded problems for the company. 

Last  month, the company had lowered its earnings outlook for fiscal second-quarter earnings to a range of $2.3 billion to $2.6 billion, down from prior forecast of $2.85 billion to $3.05 billion.

At Consumer Electronic Show in Las Vegas, Bill Watkins had admitted that December turned out to be 'just terrible' in terms of demand for hard disk drive. Watkins blamed a steep fall in distribution channel inventories for the slackening demand.

"Seagate is a strong company and we are making measurable progress toward regaining our longstanding product leadership position across all markets," said Stephen Luczo, in a statement on Monday. "I look forward to working closely with Seagate's talented employees around the world to build upon our success and accelerate the improvements we are making in our business."

Shares of the company tumbled $1.01 or 17.91% to $4.63 in afternoon trade on Monday.

Disclosure: Author does not own any of the stocks discussed here.