Seagate Technology (NYSE:STX) reported a disappointing fiscal second quarter today, which has so far knocked the stock down nearly 9% to $34.06. Other storage operators, like Western Digital (NASDAQ:WDC) and Micron Technology (NASDAQ:MU), are also lower for the day.
During the quarter, Seagate actually beat the Street’s forecasts. Revenues increased by 15% to $3.67 billion, and earnings fell by about 13% to $492 million, or $1.28 per share. The consensus was for revenues of $3.6 billion and EPS of $1.28.
But its third-quarter guidance was a bit weak. Seagate is looking for revenues of $3.25 billion to $3.45 billion. The Street estimate was for $3.48 billion.
Despite all this, Seagate continues to perform well despite a tough environment. Let’s face it, the PC market looks pretty bleak as Apple’s (NASDAQ:AAPL) iPads continue to eat into the market share of companies like Dell (NASDAQ:DELL) and Hewlett-Packard (NYSE:HPQ) along giant chipmaker Intel (NASDAQ:INTC).
But Seagate has been investing aggressively in other markets, such the cloud and mobile. For example, it recently formed a $40 million venture with Virident Systems to create flash storage memory products, which have been key for mobile devices.
If anything, the recent drop-off in Seagate’s stock has much to do with profit-taking. The shares are up 36% since late November.
So, for investors looking for a storage play, Seagate still looks attractive. After all, the shares are trading at only 4.5 times earnings. And the dividend yield is also juicy, coming to 4.1%.
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook” and “High-Profit IPO Strategies: Finding Breakout IPOs for Investors and Traders.” Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.