Original URL: http://www.theregister.co.uk/2007/07/26/rackable_q2/
Rackable's margins still in witness protection program
Q2 turns red
Posted in Financial News, 26th July 2007 21:08 GMT
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Rackable's new CEO suffered through a tough first 90 days on the job, as gross margins continued to vanish.
Rackable today reported second quarter revenue of $82m – a 14 per cent year-over-year rise. It also posted a $40m net loss during the period versus a $5.3m profit in the same period last year. The profit disappeared as gross margins dropped to -8.4 per cent from 23 per cent.
The company also copped to $21m in excess and obsolete inventory charges. Ouch.
"In my first 90 days, I have immersed myself in the operational aspects of the company and our supply chain and I believe there is clear opportunity to improve our market position and operating performance," said CEO Mark Barrenechea.
Former CEO Tom Barton was evicted [1] in April, as Rackable's formerly solid results soured. The company depends on Amazon, Microsoft and Yahoo! for the majority of its business and has faced extreme competition for these accounts from rivals. ®