Xyratex (XRTX) Q2 Results Show Positive Tends in Enterprise Storage (STX) (IBM)

Xyratex Ltd. (Nasdaq: XRTX) shares are indicated for a higher open Tuesday following second-quarter 2013 results issued after markets closed yesterday. The company reported surprise EPS of 10 cents, versus consensus estimates calling for a 5 cent per share loss.

Wells Fargo is out with a few comments on Xyratex following results. The firm said, "Xyratex's May quarter revenues from its enterprise data storage solutions (EDSS) business, which provides storage subsystems to OEM customers (NetApp (Nasdaq: NTAP), Dell (Nasdaq: DELL), HP (NYSE: HPQ), IBM (NYSE: IBM), and others), were toward the high-end of its guidance (-4.1% sequential). [Xyratex] noted two of its customers exceeded its forecasts (didn’t specify the customers) and believes the strength was more likely related to certain products performing well versus the overall market demand."

Xyratex said overall demand dynamics were good in the storage segment and total gains aren't a clear read on individual companies.

On Xyratex's hard-disk drive segment: "Revenues from the business were above the mid-point of guidance and increased 146% sequentially though of an easy compare as the previous quarter was impacted by order push-outs." HDD makers aren't adding capacity, but indicated that demand is picking-up for head and media components.

Seagate (Nasdaq: STX) recently announced that growth in cloud storage could lead to industry constraint by the end of 2013 and into 2014. Xyratex made similar comments, "noting early indications from their customers suggest higher demand for component capital equipment in areas such as head technology in 2014 and 2015," said Wells Fargo.

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