Following the release of fiscal second quarter results, shares of data storage veteran Seagate Technology (NASDAQ:STX)fell as much as 11.6% on Monday. The catalyst for this massive drop is easy to spot, as Seagate met Wall Street quarterly targets but followed up with soft guidance for the current period. But why is Seagate struggling to measure up to expectations this quarter?

Analysts were looking for earnings of $1.35 per share on $3.7 billion in sales. Seagate hit these numbers on the nose. CEO Steve Luczo explained the solid results in simple terms: "Seagate's second fiscal quarter performance is the result of consistent execution and our solid competitive positioning in the storage technology marketplace."

Seagate's second quarter did indeed show evidence of solid execution. Revenue grew by 8% year-over-year on a 17% annual increase in gigabytes of storage shipped. That works out to an approximately 8% lower street price per gigabyte. In an industry always expected to deliver more storage for less money, that is actually quite impressive.

Seagate CEO Steve Luczo. Source: Seagate

In a conference call with analysts, Luczo said the cloud enterprise market saw some "aggressive" pricing in certain contracts during the quarter, presumably from Seagate archrival Western Digital (NASDAQ:WDC) seeking to win a firmer position in that sector. But Seagate left some contracts on the table rather than burning down its profit margin in search of a sale. "In some accounts, we participated, and in others, we did not," Luczo explained.

Seagate is showing admirable business discipline here and should be expected to continue defending its profit margin even as Western Digital wants to engage in a minor price war. Yet the outlook for the fiscal third quarter failed to excite Seagate investors.

Seagate said it expects sales of "at least $3.45 billion" in the current quarter. Analysts were hoping for $3.6 billion. How does Luczo reconcile this weak guidance with his company's strong execution?

Let's call it a macroeconomic interruption. As Luczo put it:

While we are generally optimistic about calendar year 2015 in terms of the demand for storage and overall economic activity, especially that of the United States, we are tempered somewhat by the instability of the European business environment as well as the commodity and currency volatility throughout the world.

For example, Europe represents approximately 20% of our revenues, and in retail, we would have historically experienced an increase of about 5% revenue in the December quarter when, in fact, it declined by about 5%. While we expect Europe to be challenged economically for most of 2015, it's difficult to assess the degree of impact this will have on revenue and demand.

In other words, you can blame the current European economic crisis for most of Seagate's projected shortfall. This assumes analysts were not building Europe's currency and trading troubles into their estimates or that the situation worsened much more quickly than analysts could adjust their models.

All told, I'm not convinced the market is handling Seagate the right way here. After racing to a 240% gain across 2012 and 2013, the stock lost momentum in a big way and has mostly traded sideways ever since. This report obviously didn't fire the starting gun for a major Seagate rally -- and rightly so -- but it shouldn't have caused a double-digit drop either.

A modest short-term revenue adjustment that stems from economic developments far beyond Seagate's control might be cause for a slow trading day, at worst. If you were tracking Seagate for an opportunity to pounce on a temporary price drop, this could be exactly the buy signal you were looking for. If not, the Fool can help you look for the next buy-in window. Just click here to add Seagate to your Foolish watchlist.