September 30, 2011
The computing industry is changing -- but only on the consumer side. In the enterprise IT world, it's business as usual.
If you want proof, just look at today's headlines. Memory-chip maker Micron Technology (Nasdaq: MU ) is falling like a wounded swan, blaming weak demand for consumer PC systems all the way down. IBM (NYSE: IBM ) just passed Microsoft's market valuation for the first time in a decade and a half -- Big Blue is all business while Redmond wears a mullet.
And then you have Xyratex (Nasdaq: XRTX ) soaring as much as 11.9% on a terrific third-quarter report. This awkwardly spelled company makes storage systems and components for enterprise IT shops such as EMC (NYSE: EMC ) , NetApp (Nasdaq: NTAP ) , and, indeed, IBM. Both sales and earnings dwindled year over year, so it's not all wine and roses. But with revenue of $362 million and non-GAAP earnings of $0.42 per share, the company left Wall Street's expectations of $353 million and $0.17 per share far behind. And that's after absorbing $1 million of bad debt issued to failed solar-power specialist Solyndra.
Looking ahead, Xyratex's customers are holding back some of their orders while regulators ponder the proposed big-ticket merger between Western Digital (NYSE: WDC ) and Hitachi Data Systems on one side, Seagate Technology (Nasdaq: STX ) and Samsung's hard drive operations on the other. Once these transactions shake out, as I'm sure they will, the storage industry can accelerate again. Everybody hates uncertainty, you know.