Seagate Technology (NASDAQ:STX) is one of the most sensitive large-cap stocks on the market, given its close ties to the ever-degrading PC industry. For a while, the company was undeservedly punished by its affiliation, even while generating tons of free cash flow, returning it to shareholders, and shifting its operating business to the current and future trends. Things have stabilized a bit, and the stock has gained more than 55% in the last year alone, but with the recent earnings report, there actually are a few points that should make investors hesitate for a moment. Is Seagate still a buy?

Long-time bull
I've been a Seagate fan over the past few years, and have tried to defend it against the short-sighted "death of the PC" argument, which suggested the company would make little effort to shift out of a declining business and let its $15 billion market cap run to zero. I've enjoyed the company's shift to enterprise-level products and increasing exposure to the almighty cloud. Management has long impressed with smart buybacks beginning deep in undervalued territory, a move that has without doubt enhanced shareholders' returns in the long run.

By all definitions, I am a Seagate bull.

The company still trades at a seemingly cheap eight times forward earnings, and as mentioned by CEO Steve Luczo, the business has and will continue to adapt to the big growth in the market -- mobile, cloud, and open source applications. But my very favorite part of the Seagate story, regardless of its falling sales figures (which continued to fall -- 65% this quarter, year over year), was the company's immense cash flow. Throughout fiscal 2013, Seagate returned 96% of its considerable free cash flow to shareholders via buybacks and dividends. If the stock is considerably undervalued, buybacks do indeed add value to the company and its shareholders over time.

As of the fourth-quarter earnings, unfortunately, the cash flow faucet seems to have a small plug.

Fix the faucet
As part of its fourth quarter and year-end report, Seagate announced an additional $2.5 billion buyback program, bringing the total available buyback option to $3.3 billion worth of shares. In order for the ongoing buyback to remain beneficial, Seagate needs cloud and enterprise sales to tick up. In the near term, that may not be the case as the company forecast revenue for $3.5 billion in the first quarter.

Over time, I still believe that Seagate will successfully mitigate the damage of the PC fallout with its growing cloud storage business. In the meantime, however, investors may want to wait and see how punishing the market is on the stock, and potentially get in at a cheaper level than we have seen in a few months. Also keep an eye on Western Digital's apparent market share gains -- an emerging concern for some analysts. Seagate traded down as much as 10% upon releasing its earnings, but recovered to a 4% loss.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool owns shares of Western Digital. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.