From thestreet.com
Seagate
John Buckingham (1/14)
Good PC sales this holiday season made for a healthy business in disk drives. Value investor John Buckingham of The Prudent Speculator newsletter is feeling very positive about the disk drive sector, especially Seagate (SEG:NYSE), considering its better-than-expected earnings performance in the second quarter.
Seagate's second-quarter earnings of 42 cents per share -- way above the expected 26 cents a share -- was in large part due to the company's ability to raise gross margins to 23.8%, a 3.1% increase over the previous quarter. Seagate's management predicts flat to modest revenue growth, even in this current seasonally slow quarter, after the holidays.
Buckingham is bullish on five disk drive companies: Seagate, Western Digital (WDC:NYSE), Quantum (QNTM:Nasdaq), Read-Rite (RDRT:Nasdaq) and Applied Magnetics (APM:NYSE). "An improving outlook in the drive industry and Intel's excellent earnings report," is the positive factor for these companies, he says.
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