Hard drive builder Seagate Technology
Well, no problem -- the company delivered everything investors had expected and then some.
Seagate sold 61 million drives in the third quarter for a total of $4.4 billion, right in line with analyst targets. Trickling down the income statement, that 65% year-over-year revenue boost resulted in $2.64 of non-GAAP earnings per share. That's up from $0.25 per share in the year-ago quarter -- I'd give you the percentage increase here if I weren't so afraid of heights -- and way above the Street's $2.11 consensus estimate.
Anything less than a blowout quarter could have sent Seagate's shares behind the woodshed for a comprehensive beating; instead, shares gained 3.5% in early trading.
The company enjoyed a 37% gross margin this quarter, up from 32% last quarter and 19% a year ago. This is an astronomically high profit share, historically speaking. Archrival Western Digital
Looking ahead, CEO Steve Luczo believes that the industrywide supply of drives for notebooks and parts of the enterprise market have recovered already, although pockets of supply/demand imbalance still remain. Desktops will still see some supply-side constraints well into the fall. The exploding market for cloud-computing infrastructure makes it hard to keep up with rising demand for drives with very large storage capacities.
As good as this report was from Seagate's point of view, it sends mixed messages about the rest of the computer industry. If hard drives aren't holding notebook sales back, that's obviously good news for leaders in the market like Hewlett-Packard
In most cases, it all comes out in the wash. Look to Thursday's report by Microsoft
Cloud computing and business-critical analysis of huge data sets are turning the whole IT industry upside down, and Seagate is clearly enjoying the ride. These technology megatrends work in favor of the big and cheap magnetic disk drives that are Seagate's bread and butter. In a special report penned by The Fool's finest analysts, you'll find the only stock you need to profit from the new technology revolution in Big Data and business intelligence. The report is totally free, but it won't be available much longer, so get your copy right away.