Rackable Systems ( RACK) said late Tuesday that earnings for the fourth quarter will soundly miss Street estimates.

The Milpitas, Calif., company said that revenue for the quarter ended Dec. 30 is expected to be in the range of $105.5 million to $106.8 million, in line with analysts at Thomson First Call who pegged sales at $106.1 million for the fourth quarter.

Earnings, excluding items, however, are forecast in the range of $4.8 million to $5.3 million, or 17 cents to 18 cents a share, widely missing the Street forecast of 27 cents a share for the fourth quarter.

After hours, shares recently plummeted 24%, or $7.77, to $24.65.

On the same basis, gross margin is expected to be between 19.2% and 19.7%.

Rackable, which competes with Dell ( DELL), Hewlett-Packard ( HPQ) and Sun Microsystems ( SUNW), sells servers and storage products used by large Internet companies.

Rackable CEO Tom Barton, while pleased that the company broke the $100 million quarterly revenue mark, was "disappointed that we did not achieve our gross margin and EPS goals for the quarter."

Shares of the company closed the regular session up 79 cents to $32.25.

The company reports earnings on Feb. 1.