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 Seagate (NASDAQ:STX) have plunged 10% today following earnings that, while surpassing analyst expectations on the top and bottom lines, contained unwelcome downbeat guidance and executive comments that indicated that the current quarter would be more difficult.

So what: Seagate's fiscal second quarter saw revenue of $3.7 billion and adjusted earnings per share of $1.38, beating the consensus by $120 million and $0.10 per share, respectively. However, investors have focused on guidance for the in-progress third quarter, which forecasts revenues in the range of $3.25 billion to $3.45 billion, below analyst expectations even on the high end and well below the year-ago third quarter's result of $4.45 billion. Margins are also expected to weaken, with the expectation now that Seagate will hit the low end of its 27% to 32% margin range. CEO Stephen Luczo also admitted that it might be difficult to forecast demand, and CFO Pat O'Malley told TheStreet this morning that the PC slowdown and Windows 8 were putting additional pressure on the hard drive market.

Now what: This news prompted a downgrade from FBN Securities from buy to hold, although analyst Shebly Seyrafi increased his target price to $40 a share regardless. Reduced margins may be bad news in the near term, but Seyrafi pointed out that this indicates a willingness to battle chief competitor Western Digital on prices. A successful outcome would gain Seagate more market share, which would be worth the short-term weakness. Seagate also announced a small $40 million investment into flash memory maker Virident, which helps expand its product lineup. Additionally, its dividend remains strong, although it won't be paid out for a while, as the company accelerated payment into year-end 2012 to avoid the fiscal cliff.

Fool contributor Alex Planes owns shares of Seagate. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights.

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