Rackable Systems Slashes Forecasts, Cuts Workforce

The provider of server and storage products for large-scale data centers late on Tuesday cut its revenue guidance for the entire year to between $245 million to $250 million, compared to the $275 million to $300 million it had expected.

Rackable Systems also said its non-GAAP gross margin will be below its original projected range of 16 percent to 18 percent, and that its cash and equivalents and investments will be in the range of $175 million to $185 million, down from the original projections of $175 million to $200 million.

As a result of the lowered expectations, the company said it is taking a number of steps to reduce expenses, including the laying off of about 15 percent of its workforce in January.

In a statement, Mark Barrenechea, president and CEO of Rackable Systems, said, "Our cost control and working capital actions resulted in strong inventory controls and cash management, despite a challenging quarter. We continue to protect our strong balance sheet, manage our working capital and be debt-free."

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Rackable Systems sells its data center storage and server equipment through system integrators and large solution providers in the U.S.

Share prices of Rackable Systems fell 15.4 percent to $4.11 per share on Wednesday.

Details of its fourth fiscal quarter results are slated to be released on Feb. 12.

The number of employees at Rackable Systems was not immediately available.