Why Western Digital Corp. Soared Today

Image source: Getty Images.

What happened?

Shares of Western Digital (NASDAQ: WDC) jumped as much as 13.9% higher in Wednesday's morning session. Before the opening bell, the data-storage veteran raised its financial guidance targets for the first quarter of fiscal year 2017.

So what?

Western Digital's original first-quarter guidance called for adjusted earnings of roughly $0.88 per share on sales near $4.45 billion. The new bottom-line target points to non-GAAP (generally accepted accounting principles) earnings of approximately $1.03 per share; revenue should stop closer to $4.5 billion. In short, earnings estimates were boosted by 17%, along with a 1% higher revenue target.

The integration of recently acquired solid-state storage specialist SanDisk is running ahead of schedule. Both sales and margins were helped by a surprisingly high-end product mix, allowing Western Digital to bank higher prices per unit sold.

Now what?

As a Western Digital shareholder myself, I'm obviously thrilled to see strong pricing trends driving solid business results. This guidance update should paint a fairly accurate picture of the underlying business trends, given that we're more than two months into the three-month reporting period.

Archrival Seagate Technology (NASDAQ: STX) also rose on Western Digital's news, gaining as much as 5.6% on Wednesday morning. Mind you, this may or may not be a correct market reaction. We don't know yet whether Western Digital's improving results were the result of company-specific operating discipline or a positive industrywide trend.

Industry barometers such as sales of PC and server systems are inconclusive. The complete picture is still a few weeks away -- both companies will report their final numbers near the end of October. Stay tuned to get a complete understanding of the storage industry's general health, and which way the balance of power is leaning nowadays.

A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Anders Bylund owns shares of Western Digital. The Motley Fool also owns shares of Western Digital. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.