Shares in Western Digital Corp. dropped by nearly 5% in late trading despite the drive manufacturer and data storage company beating every metric across the board, including revenue, earnings and outlook, in some cases by a big margin.

For the fiscal second quarter, Western Digital reported an adjusted earnings per share loss of 69 cents, down from a loss of 42 per share in the same quarter of last year but a notable improvement from a loss of $1.76 in its fiscal first quarter.

Revenue came in at $3.023 billion, down 2.5% year-over-year but up 10% quarter-over-quarter. Analysts were expecting Western Digital to report an adjusted loss per share of $1.13 on revenue of $2.99 billion.

Western Digital reported a net operating loss of $268 million in the quarter, an improvement over the $685 million it lost the prior quarter. Operating expenses rose 1% from the last quarter, to $702 million.

How Western Digital made money in its second quarter was a mixed bag, with cloud revenue coming in at $1.071 billion — up 23% quarter-over-quarter but down 13% year-over-year. Client revenue rose 3% from a year ago, to $1.122 billion, and consumer revenue rose 6%, to $839 million.

Cloud represented 35% of total revenue, with the quarterly growth attributed to higher “nearline” or onsite data storage shipments to data center customers and better nearline pricing. The increase in client revenue was driven by an increase in the average selling price of flash memory and customer revenue was driven by a seasonal surge in flash bit shipments.

“Western Digital’s second quarter results demonstrate that the structural changes we have put in place over the last few years and the strategy we have been executing are producing significant outperformance across our flash and HDD businesses,” Chief Executive David Goeckeler said in the company’s earnings release. “I am confident that our strategy of managing inventory proactively, offering a broad range of products, closely controlling our product cost through focused research and development and manufacturing, and bolstering the agility of our business will allow us to improve through-cycle profitability and dampen business cycles into the future.”

For its fiscal third quarter ending March 29, Western Digital expects adjusted earnings per share to range from a 10-cent loss to a gain of 20 cents, a notable turnaround over its recent figures. Revenue is expected to come in at $3.2 billion to $3.3 billion, also healthy growth. Both were beats, as analysts had expected an outlook loss of 42 cents per share on revenue of $2.99 billion.

With beats all around, it’s unclear why Western Digital shares were down in late trading; however, notes from an investor call were unavailable at the time of writing. It’s possible that something may have been said on the call that concerned investors, accounting for the stock drop.

Image: CEBIT Australia/Flickr