Hard drive builder Seagate Technology
The hard drive industry is in shambles right now due to flooding in Thailand. This large-scale disaster is cramping the whole sector's style, as 40% of the world's hard disks are assembled there. But Seagate's Thai factories weren't flooded.
This will hurt you more than it hurts me, my friend
The supply chain is damaged, because TDK and other parts manufacturers make many of the hardware parts in Thailand and crucial chips from ON Semiconductor
Management just updated its outlook for the current quarter. Seagate expects to make and sell about 43 million units out of a total market for 120 million units at most. By comparison, Seagate sold 50.7 million drives in the previous quarter but the total market was much larger at 177 million units.
In other words, the company hopes to boost its market share from 29% to 36% in just three months. At the same time, Western Digital's take shrinks from 33% to about 21%. Moreover, prices tend to jump when demand outstrips supply so gross margins should expand from 20% to roughly 28%. The last time Seagate saw gross margins like that (in the summer of 2010), net margin came in about three times as rich as what the company saw last quarter.
So even though the Thai floods limit Seagate's production volumes, others are suffering more and it's generally a bonanza for the company. The longer it takes Western Digital to rebuild its severely damaged facilities, the longer Seagate's gold rush will last.
But wait -- there's more!
This chaotic era in the history of hard drives could also be a boon for solid-state drive manufacturers OCZ Technology
But Seagate isn't going to let SSD opportunities slip through its fingers either. In a separate release, the company also introduced a new line of hybrid drives intended to combine the speed of SSD with the low-cost bulk of spinning magnetic disks. The Momentus XT series is nearly as fast as an entry-level Intel
It may not be quite good enough to steal the SSD vendors' thunder, but certainly enough to keep Seagate relevant as the new technology moves into the mainstream.
And there's one market where SSD drives won't touch Seagate's bread-and-butter products for years to come. The Big Data trend toward enormous data sets in massive storage arrays will keep Seagate and Western Digital afloat even if they do miss the SSD bus. Learn all about Big Data in this special report, and you'll see the name of one stock that rides this market like nobody else. Grab your copy right here -- it's totally free.
Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Western Digital and Intel, and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.