Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.

Recs

10

This Tech Rally Is Real!

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Open letter to all the skeptics: This tech rally is real.

I can forgive some apprehension after Intel's (Nasdaq: INTC  ) report, which was so good that it surprised even the company's own management. Then, Apple (Nasdaq: AAPL  ) delivered predictable excellence in a nutshell, and your doubts should have started to fade. VMware (NYSE: VMW  ) showed that the software side of the house can shine, too.

And now, with last night's fourth-quarter report from Western Digital (NYSE: WDC  ) , the two largest hard drive makers have reinforced the unmistakable message: People are buying gadgets and computers again. The drought is over.

Western Digital managed to pull an Intel and surprise itself. Forty million hard drives shipped translated into $1.9 billion in revenue, and net income of $0.86 per share. That's a unit volume record for the company, and both sales and profits have nearly returned to where they were a year ago. The stock’s trading down today on concerns it’s risen too fast, up 200% since November. But don't be fooled -- this was an amazing quarter.

Last quarter, management set its sights on fourth-quarter revenue around the $1.5 billion mark, a 15.4% gross margin, and earnings no higher than $0.24 per share. Have a look at the actual margins:

Metric

Q4 2009

Q3 2009

Q4 2008

Gross

19.2%

15.9%

21.3%

Operating

10.8%

5.0%

12.1%

Net

10.2%

3.1%

10.7%

Across the tracks, chief rival Seagate Technology (Nasdaq: STX  ) told a very similar story last week. 40.6 million drives shipped, $2.35 billion net sales, and adjusted net income of $0.06 per share combined to give both Seagate and Western Digital shares a boost. Together, the two companies tell a rather complete tale of market health: Western Digital goes after netbook contracts aggressively and likes to rule the lower end of the market, as evidenced by an average selling price of $48 per drive. Seagate's average prices are much higher at $58 per unit -- but both businesses are doing just fine.

Yes, there are exceptions to the recovery. Microsoft (Nasdaq: MSFT  ) seems stuck in the mud until Windows 7 hits store shelves in a couple of months. Advanced Micro Devices (NYSE: AMD  ) had to clear out old inventory, while Intel thrived on new product sales this quarter. But these are the exceptions -- not the rule. Evidence has reached critical mass on the bullish side of this argument.

Convinced of this market recovery yet, Doubting Thomases? I really think you should be. Feel free to tell me off in the comments box below, though.

Further Foolishness:

Start investing today – just $7 per trade with Scottrade. Or find the broker that’s right for you.

VMware is a Motley Fool Rule Breakers selection. Apple is a Motley Fool Stock Advisor recommendation. Intel and Microsoft are Motley Fool Inside Value selections. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Anders Bylund owns shares in AMD, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (0) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 952738, ~/Articles/ArticleHandler.aspx, 7/30/2015 9:16:17 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Anders Bylund
TMFZahrim

Anders Bylund is a Foolish Technology and Entertainment Specialist. Where the two markets intersect, you'll find his wheelhouse. He has been an official Fool since 2006 but a jester all his life.

Hypoallergenic. Contains six flavors not found in nature. Believes in coyotes and time as an abstract.

Follow Anders on social media: Twitter, LinkedIn, and Google+.

Today's Market

updated 19 seconds ago Sponsored by:
DOW 17,745.98 -5.41 -0.03%
S&P 500 2,108.63 0.06 0.00%
NASD 5,128.79 17.05 0.33%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

7/30/2015 4:00 PM
WDC $86.44 Up +7.69 +9.77%
Western Digital Co… CAPS Rating: ***
AAPL $122.37 Down -0.62 -0.50%
Apple CAPS Rating: ****
AMD $1.93 Down -0.03 -1.53%
Advanced Micro Dev… CAPS Rating: **
INTC $28.91 Down -0.10 -0.34%
Intel CAPS Rating: ****
MSFT $46.88 Up +0.59 +1.27%
Microsoft CAPS Rating: ***
STX $51.29 Up +1.87 +3.78%
Seagate Technology CAPS Rating: ****
VMW $88.51 Up +1.28 +1.47%
VMware CAPS Rating: ****

Advertisement