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Rackable Says It Will Miss Forecast

MILPITAS, Calif. -- Rackable Systems, Inc., (NASDAQ: RACK) today announced preliminary results for the fourth quarter ended December 30, 2006. Total revenue for the fourth quarter of 2006 is expected to be in the range of $105.5 to $106.8 million. GAAP net income (loss) for the period is expected to range from a net loss of $(683,000) to net income of $194,000 or $(0.02) to $0.01 per diluted share. Non-GAAP net income is expected to be in the range of $4.8 to $5.3 million or $0.17 to $0.18 per diluted share. Non-GAAP gross margin is expected to be between 19.2% and 19.7%.

We are pleased that revenue for the fourth quarter came in toward the high-end of our forecast, and that we broke the $100 million quarterly revenue mark for the first time in the company’s history. However, we are disappointed that we did not achieve our gross margin and EPS goals for the quarter,” stated Tom Barton, Chief Executive Officer of Rackable Systems. He continued, “Although it took us longer than expected to roll out our new RapidScale line of products, early customer feedback has been positive and we remain enthusiastic about the long-term opportunities for this business.”

Rackable Systems Inc.