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Rackable's troubled financials

SeekingAlpha today covered Rackable’s troubling first quarter financial report:

Rackable Systems swung to a $10.2 million ($0.36/share) loss, from a $0.23/share profit a year ago, blaming pricing pressures on its three top accounts and surging expenses. Revenue dropped 15% to $72 million.

The problems were with poaching of Rackable’s marquee customers: Amazon, Yahoo!, and Microsoft. According to coverage at The Register:

Rackable has pumped these three accounts for all their worth and for the vast majority of its business. Apparently, Dell, HP, IBM and Sun Microsystems finally caught on to this fact.

“The key factor affecting our performance during the quarter was aggressive pricing from competitors for orders at our top three accounts,” said Rackable CEO Tom Barton.

Rackable’s most recent mention in this space was speculation about rumors of a possible acquisition by Sun and Concentro, Rackable’s answer to Sun’s Blackbox.

Trackbacks

  1. [...] You may recall that Rackable announced in April that it lost $10.2M US in Q1 triggered by a loss of business with Yahoo!, Microsoft, and Amazon to competitors IBM, HP, Sun, and Dell. Earlier this year Rackable also announced it’s own containerized computing solution to compete with Sun’s, and was the subject of acquisition rumors with Sun that haven’t panned out. From The Register: Our sources contend that Rackable passed on a lucrative acquisition offer from Dell, which served as the trigger for the management shuffle. [...]

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