Rackable Rockets on Sun Rumor

Rackable's customer list includes marquee Internet names Amazon.com(AMZN Quote), Yahoo!(YHOO Quote) and Microsoft(MSFT Quote). In fiscal 2006, Microsoft and Yahoo! accounted for 34% and 26%, respectively, of the company's $360 million in sales.

Sun is also trying to focus its sales efforts on Internet companies, with new products such as its Galaxy line of x86-based servers as well as servers featuring Sun's proprietary Niagara chip.

Sun says its Niagara-based servers are specially optimized for Web-based tasks, such as processing online commerce transactions.

A representative from Rackable was not immediately available for comment.

Sun spokeswoman Kristi Rawlinson said the company continues to look at acquisitions, thanks to its strong balance sheet, but it does not comment on specific rumors or speculation about acquisitions.

Shares of Sun were down 2.5%, or 16 cents, at $6.33 in late afternoon trading.

Rackable's stock has taken a beating from the Street in past months after disappointing sales guidance and a high-profile executive departure. The company's stock is down 68% from its 52-week high of $56.

On Wednesday, Rackable named a new worldwide vice president of sales, three months after the surprise exit of its previous head of sales.