Why Western Digital and Seagate Technology Rallied Together

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of hard-drive makers Western Digital (Nasdaq: WDC  ) and Seagate Technology (Nasdaq: STX  ) both rallied today, up by as much as 26% and 16%, respectively, after Western Digital reported strong earnings.

So what: Western Digital's revenue in the fiscal fourth quarter added up to $4.8 billion, with net income of $745 million, or $2.87 per share. On an adjusted basis, the bottom line was $3.35 per share. That last figure handily trounced the analyst expectation of just $2.47 per share in adjusted profit.

Now what: It was a record quarter for Western Digital, and investors are taking it as a positive sign for rival Seagate, which also expects to see record results. Seagate had announced preliminary estimates for its own fiscal fourth quarter, expecting record revenue of $4.5 billion. That company's official results will be released on July 30, but investors already have a good idea of what to expect.

Interested in more info on Western Digital or Seagate Technology? Add it to your watchlist by clicking here or here.

Fool contributor Evan Niu holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Western Digital. The Motley Fool has a disclosure policy.
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  • Report this Comment On July 26, 2012, at 4:00 PM, ajwalker249 wrote:

    Don't be fooled by these results. These guys benefited from increased prices at the start of the year as a result of shortages stemming from the Thailand floods at the end of the last year. As production levels resume, PC and server demand is dropping meaning supply balance will be reached sooner rather than later resulting in significant price declines as they resume fighting over market share.

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