To summarize where I think this Board is at on the soon to issue quarterly WD report: we all think that they will exceed expectations both as to revenue and earnings significantly. There is a bit of divergence around where their average price and gross margin will be behind those headlines, but the important message for the Street will be both of the remaining drive companies are growing revenues and earnings at the same time so nobody is stealing anyone else's lunch.
Now of course that may moderate when the industry is back producing at full capacity for a few quarters long enough to refill backlog and inventory, but, even then, there is significant enough growth in petabyte demand to support growing revenues and earnings with relatively stable market shares and product pricing. A vision of the new world if sound minds are at work in production planning.
A remaining chestnut is the question of the relative value between WD and STX if both companies are properly valued. Not that WD has the high enterprise assets of HGST, there should be less of a premium accorded to STX and, over time, as gatrz has suggested, each company's revenues should have equivalent blended profitability. I would then expect the market caps and enterprise values to converge pretty closely.
This does suggest that WD has some room to catch up when they emerge from the flood/HGST integration miasma and initiate a dividend/stock repurchase effort that puts it on a level playing field with STX. In the meantime, both companies have plenty of room to move higher by at least 50% IMO.
Fits and starts: the share price of the two companies continue the slow process of convergence, sometimes with WD falling more than STX like now and other times with STX rising more than WD, but rarely with the two stocks moving in opposite directions.
This sell off storm will pass as cooler heads realize that all that was said by WD yesterday still does not contradict a post flood recovery world in which both STX and WD can each earn between $6 and $8 a year.
Current stock prices for both companies are below that post-flood reality and therefore have room to move up substantially.
Looks like ASP and GM are about flat with last quarter to down a smidgeon.
I think you were expecting both would be going up so I will claim a modest victory.
Otherwise, a great quarter for WD and for the industry as a whole and I trust that "serving adequately" does not equate with fully serving.
As a final thought, for the first time in as long as I can remember, I am looking forward to and rooting for a WD blowout; and I am a STX long.
That alone is a reflection of how much the industry has changed for real with the effects of the flood and the two consolidating transactions.
So long as both companies are enjoying increasing revenues and profits at the same time, there will be that much less incentive for either one to fall down the rathole of discounting to move a few more drives at the margin.
Minor correction: WD is enjoying a P/E premium right now over STX but STX is getting a market cap premium, so STX has room to run on the P/E front and WD still has ground to make up on the market cap front.
Both are headed up without adversely impacting the other.