Feeds

Rackable gets racked by investors

Q4 earnings miss mark

Top 5 reasons to deploy VMware with Tegile

The ever volatile shares of Rackable Systems have imploded following a fourth quarter financial warning.

Rackable on Tuesday informed investors that fourth quarter gross margins and earnings per share figures would likely come in well below analyst expectations. The server and storage maker blamed higher memory costs, pricing pressure from rivals, and slower than expected sales of its new RapidScale storage products. Investors responded to the news by sending Rackable shares down between 30 per cent and 47 per cent in the after-hours markets.

Fourth quarter revenue should come in between $105.5m and $106.8m - a range near the high-end of previous forecasts. Rackable also expects to post net income somewhere between a loss of $700,000 and a profit of $194,000.

Rackable expects these results to translate into earnings per share of 17 cents to 18 cents - well off the analysts' mark of 27 cents per share.

It's not unusual for Rackable's shares to shift 30 per cent or more on negative news. Investors have come to expect nothing but double-digit growth from the hardware start-up that claims such impressive scalps as Microsoft and Yahoo! and punish it when it fails to deliver.

During our interview last month, Rackable's CEO Tom Barton emphasized the gross margin pressure being felt by the the company.

Barton's hoping that the new RapidScale storage line can produce higher margin sales than the company's flagship server boxes. Clearly, however, things have not moved along at the clip Barton hoped.

"Although it took us longer than expected to roll out our new RapidScale line of products, early customer feedback has been positive and we remain enthusiastic about the long-term opportunities for this business," he said in a statement. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Azure TITSUP caused by INFINITE LOOP
Fat fingered geo-block kept Aussies in the dark
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
Want to STUFF Facebook with blatant ADVERTISING? Fine! But you must PAY
Pony up or push off, Zuck tells social marketeers
Oi, Europe! Tell US feds to GTFO of our servers, say Microsoft and pals
By writing a really angry letter about how it's harming our cloud business, ta
SAVE ME, NASA system builder, from my DEAD WORKSTATION
Anal-retentive hardware nerd in paws-on workstation crisis
Astro-boffins start opening universe simulation data
Got a supercomputer? Want to simulate a universe? Here you go
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Getting started with customer-focused identity management
Learn why identity is a fundamental requirement to digital growth, and how without it there is no way to identify and engage customers in a meaningful way.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Reducing the cost and complexity of web vulnerability management
How using vulnerability assessments to identify exploitable weaknesses and take corrective action can reduce the risk of hackers finding your site and attacking it.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.