This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Rackable Ripped by Economy's Crunch

The financial crisis has claimed one of its first victims in the tech sector.

On Monday, computer maker Rackable Systems (RACK) warned Wall Street that its financial performance will be significantly lower than it previously expected due to the "abrupt financial and economic deterioration."

The Fremont, Calif., company, which makes servers used by corporations, cut its full-year sales outlook by as much as 22% and projected a steep loss -- even after backing out one-time items like writedowns and restructuring charges.

"The recent market downturn has been dramatic and has greatly impacted the timing of our customers' buying decisions," said CEO Mark Barrenechea in a statement Monday. "The swift decline of the economy caused a demonstrable slowdown in corporate purchasing as we entered September."

Shares of Rackable plunged 19.9%, or $1.74, to $7 in extended trading Monday.

The sales shortfall is the latest blow to Rackable, which has been struggling to mount a comeback under Barrenechea.

The company faces intense competition from IBM (IBM - Get Report), Hewlett-Packard (HPQ - Get Report) and other server makers who have laid siege to Rackable's stable of high-profile customers, which includes Web heavyweights like Amazon (AMZN - Get Report) and Yahoo! (YHOO - Get Report).

In August, the company missed Wall Street's second-quarter financial expectations after it was forced to cut prices in order to prevent one of its accounts from defecting to a rival.

The company said Tuesday that it acquired 25 new customers in the third quarter, and noted that new products are slated for release in the fourth quarter.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
RACK $0.36 0.00%
AMZN $445.10 0.00%
HPQ $33.26 0.00%
IBM $169.78 0.00%
YHOO $44.52 0.00%

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs