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Facebook and white trash data centers make Rackable smile

Ready to rule crumbling economy

Internet Security Threat Report 2014

A flush Facebook nudged Rackable Systems' revenue higher during the fourth quarter.

Facebook, Microsoft and Amazon.com accounted for at least 10 per cent each of Rackable's $117.m fourth quarter haul. That revenue total marked a five per cent year-over-year rise for Rackable, which sells servers and storage boxes. But while the web-happy clientèle keep Rackable going, the company has decided to talk less about its prized possessions.

"We are not breaking out customers or amounts," said Rackable CEO Mark Barrenechea, during a conference call with analysts. "I think it reflects a good corporate discipline and a culture and tone of the business."

Come on, Mark. Have some fun.

In the good old days, Rackable, under the leadership of former CEO Tom Barton, would spill all kinds of beans about its largest customers. In particular, Barton loved to talk about how much gear Rackable moved to Microsoft, Amazon.com and Yahoo!. In the past, Rackable had specified, for example, that a single customer accounted for as much as 42 per cent of revenue in a given period.

Barrenechea wants to keep people guessing and would only say that Microsoft, Amazon and Facebook each accounted for at least 10 per cent of revenues in the fourth quarter.

(Incidentally, Facebook is about to dish out close to $200m in data center spending.)

The new CEO also issued a hard-line stance against doing business with customers that want to play margin games. In recent quarters, Rackable's margins had dipped into the negative as it battled with Dell and others on price. Moving forward, Barrenechea wants no part of what he termed "unfavorable business".

Unboxing the data center

Like Sun, Rackable sells a full data center in a container - it calls the product the Ice Cube to reflect its power efficiencies.

"It is tough to give a range of the amount or quantity of containers," he said. "It could be somewhere in the range of 20 to 50 (in 2008)."

Looking back at the fourth quarter specifics, we find Rackable posting a $19m loss, which compares to a $600,000 profit in the same period last year.

For the full year, Rackable reported revenue of $353m - a slight dip from $360m in 2006. Rackable also handed in a $70m loss for the year instead of an $11m profit as in 2006.

For 2008, Rackable expects to see revenue that's flat to up 10 per cent.

Barrenechea bragged that the company has just the right business for a struggling economy, since it's all about power savings, efficiency and saving space. ®

Internet Security Threat Report 2014

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