Rackable Outlook Dims a Bit

Rackable Systems, Inc. (RACK) continues to lead in green technologies for lower power consumption, and high-density servers. We remain encouraged by the company's robust product pipeline.

However, on October 13th, Rackable trimmed its outlook for fiscal 2008 due to a slowdown in corporate purchasing due to a weak economy, which has impacted sales and bookings. Rackable has re-affirmed its guidance for 2008, which we believe the company will be able to reach. Hence, our estimates for the fourth quarter of 2008 remains unchanged.

We believe over the long-term it may be a challenge for the company to compete with larger hardware vendors. We maintain a Hold rating on RACK shares and cut our price target to $6.00, given, the company's weak outlook.

Priyanka Poddar contributed to this report.

Read the full analyst report on RACK

Read the full analyst report on RACK