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.