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Don't Get Racked!

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February 02, 2007 – Comments (1)

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http://www.f...-racked.aspx

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"Oversold!"

That's what a lot of people were screaming last time Rackable Systems (NYSE: RACK) took a 20% dive, not unlike today. I didn't really buy that argument, and I'm certainly glad I didn't buy the stock, not even for my virtual portfolio in Motley Fool CAPS.

Last night, the firm said, "Umm, oh yeah, next year's earnings? Might not be so hot," or other words to that effect. In fact, they might not even count as "earnings," what with that big ol' negative sign coming in front of the range. But hey, it's all good! In non-GAAP or "wishful thinking" terms, the company plans to do a whole lot better.

Except on margins, which are expected to continue to take a pummeling. That's what happens when you're in a space with bruisers like EMC (NYSE: EMC), Dell (Nasdaq: DELL), Hewlett Packard (NYSE: HPQ), IBM (NYSE: IBM), and a billion others.

The only thing that's surprising here is how long investors were willing to suspend their disbelief and float this stock.

At the time of publication, Seth Jayson had no positions in any company mentioned here. View his stock holdings and Fool profile here. Dell is a Motley Fool Inside Value recommendation. Fool rules are here.

1 Comments – Post Your Own

#1) On February 02, 2007 at 3:52 PM, TMFKopp (98.50) wrote:

This was worth a sweet negative 17 points for me. Yeah!

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