As earnings season drags on into its final stretch, technology stocks have been the laggards. For hard drive manufacturers, the issue is the inevitable decline of the PC. The two leaders in the space, Western Digital Corp. (NASDAQ:WDC) and Seagate Technology PLC (NASDAQ:STX) , are guilty by association whenever the other mentions future declining demand, but there is more to look at than just PC hard drive shipments. Western Digital recently posted strong earnings, but the stock didn't react. How should investors factor in the PC apocalypse for the future of Western Digital? Let's take a look at the company's second quarter earnings for hints.

An impressive run The end of 2012 was kind to Western Digital, which swung high and low throughout the year based on analyst and investor fears regarding the company's ability to adapt in a post-PC world. But while the pundits were at work, the company continued to grow its sales and generate free cash flow. The stock sailed into 2013 looking strong and has witnessed a three-month jump of nearly 35%.

The second quarter of fiscal 2013, ended in December, confirms the theories behind the rise in its stock price.

Quarter in review For the second quarter, Western Digital was able to bring in $3.8 billion in revenue. This handily surpassed the analysts' expectations of $3.68 billion. Gross margins for the quarter were at 27.7% -- a tad bit higher than rival Seagate's 27 % gross margin, which was down a few points from the prior year's quarter. Net income sailed higher from the previous year to $335 million on a GAAP basis, and $513 million for non-GAAP. This translates to $1.36 per share and $2.09 per share, respectively. The adjusted EPS number (non-GAAP) surpassed analyst expectations of $1.82 per share by a long shot.

Western Digital brought in $526 million in free cash flow in the December quarter. This helped bring the total cash and equivalents for the company to an impressive $3.8 billion and net cash of $1.7 billion. Not always the case in technology companies, both Western Digital and Seagate's biggest appeal may be in their ability to generate tons and tons of cash for distribution to shareholders. Western Digital initiated its first dividend back in October and continued it in the December quarter.

All in all, things look strong for Western Digital's second quarter. Certainly better than competitor Seagate, which also saw a substantial rise in revenue, but was unable to translate that to bottom-line growth based on rising costs and softening margins. Just a year ago, the situation was reversed as Western Digital greatly suffered from the flooding in Thailand that nearly ceased production for the hard drive manufacturer.

Of course, the stock didn't react the way it should have, as analysts and investors continue to be seemingly surprised that PC demand will decline in future quarters.

Can Western Digital pick up the game in other areas to compensate?