Much of the hard disk drive industry has been a mess and scrambling to get back up and running after the floods in Thailand last year. The disorder even spread throughout the broader PC market, since it's hard to build a PC without a HDD.
Intel (Nasdaq: INTC ) had recently cut its guidance because of HDD shortages, so the chipmaker will also benefit as the HDD industry recovers. Seagate Technology (Nasdaq: STX ) ended up coming out better than rival Western Digital (NYSE: WDC ) because its facilities weren't hurt as badly as Western Digital's. Seagate stands to gain market share as Western Digital rushes to pick up its pieces.
Western Digital continues to try to push its acquisition of Hitachi's (NYSE: HIT ) data-storage unit, and the sooner it can close, the sooner it will regain its footing, since Hitachi's factories in the region are outside the flooded area.
Well, today Seagate put out some cold, hard figures to back up that conjecture. The company has released "preliminary" second-quarter earnings and third-quarter guidance. It's not an "official" earnings release, mind you, but it might as well be. The results also include operating activity from the acquisition of Samsung's HDD business, which just closed last month.
Seagate shipped about 47 million disk drives during the quarter, including 700,000 from Sammy. Second-quarter revenue should be between $3.1 billion and $3.2 billion, with gross margin at least 30.5%, before any acquisition-related charges. The results top the company's own prior estimate of 43 million shipments and the analyst consensus estimate of $2.8 billion in sales.
It gets better, as Seagate sees an upbeat third quarter to boot. Calendar 2012 demand is expected to exceed supply, resulting in pricing stability. Seagate sees third-quarter revenue in the range of $4.2 billion to $4.5 billion, beating the estimate of $3.7 billion. Seagate continues to crunch numbers on acquisition-related costs, so its forecasts exclude them for the time being.
Solid-state drives continue to be the show-stopper for the future, and longer-term, traditional HDD makers continue to migrate to the newer technology while younger companies like OCZ Technology (Nasdaq: OCZ ) focus primarily on the SSD market. OCZ hasn't been slacking, either. It just released preliminary results of its own a month ago and sees revenue jumping by 90% as SSD adoption picks up pace.
Seagate's figures are strong, but I still think pure-play SSD makers are a better bet in the long run.
Data-storage vendors will benefit from the mobile revolution, as data centers will see explosive growth in storage needs. The mobile revolution is set to become The Next Trillion-Dollar Revolution. There are lots of companies that are set to cash in on it, but one in particular has excellent prospects. The company is one of few players that will help power the mobile devices of the future, and it also has exposure to the explosive growth in China. I'm so bullish on the stock that I've given it an "outperform" CAPScall. Get access to this 100% free report to find out what company I'm talking about.