Rackable Systems (RACK) reports today and its a tough call

Just a year ago Rackable Systems, Inc.  (Public, NASDAQ:RACK) was the next big idea and company to hit the scene but it didn't take long for Dell (NASDAQ:DELL) and Sun Microsystems (NASDAQ:SUNW) to steal their market share away dollar by dollar. Today Rackable reports Q3 earnings after the close of the bell, so could this the quarter they finally turn it around?

Shares of Rackable spiked in early June on talk of a possible buyout but since then it's been an investor's nightmare. Rackable's stock got the beat-down this summer and has led many to speculate that one of its larger competitors could swoop in for a bargain purchase.  It's been months now since that talk started, but nothing has happened, so now what?  If you're a Rackable investor what do you make of things and if you're waiting for an entry point, what do you go on?

Rackable is set to report financial results for the third quarter fiscal year 2007 today after the close (10/25). The stock is down 56% over the last year and in the last six months its only moved up 1.6%.  Shares of RACK are now in the $14 range, just three bucks away from its 52-week low and miles away from $37 a share around last Thanksgiving. 

Rackable's future is riding on their new ICE Cube™ modular data center. Designed to enable rapid deployment of computing and storage in nearly any environment, ICE Cube features density levels of up to 11,200 processing cores or up to 4.1 Petabytes of storage in a weatherproof, fully mobile 40’ x 8’ ISO shipping container that can be easily transported via truck, rail or ship.

ICE Cube is well suited for a broad range of deployment scenarios—from military and intelligence applications to disaster recovery scenarios to basic data center expansion. It provides flexibility for expansion to areas in which traditional data center facilities are unavailable, cost prohibitive or cannot otherwise capitalize on alternative energy sources in remote locations. A fully populated ICE Cube can be designed, built and delivered in a matter of weeks.

ICE Cube can house up to 1,400U of Rackable Systems’ Eco-Logical™ DC powered servers and storage, providing an energy efficient and flexible solution. It leverages quad-core processors in Rackable Systems’ half-depth servers and storage, enabling extremely high density per square foot. ICE Cube’s unique, highly efficient cooling technology can reduce cooling and air handler power costs by up to 80% over traditional brick-and-mortar data center environments.

Sun Microsystems has a similar product called Blackbox with the starting price at $750 million, Rackable has not detailed its prices.  The idea behind a containerized data center is simple enough. "ICE Cube is ideal when a data center has run out of space and power and they don't want to spend $100 to $500 million building a new data center," said Colette LaForce, Rackable vice president of marketing. "They can roll this data center out quickly and plug it into a power source anywhere. A lot of businesses want to have a remote data center for disaster recovery purposes, or they want to be close to their customers."

We'll find out after the close if the ICE Cube made any money for Rackable this quarter, it's anybody's guess. However long-term, if Rackable's ICE Cube turns out to be worth the time and money spent on R&D, they could see a benefit to their current stock price.

Article written by Ted Gottsegen 

Contributor at TheStockMasters.com

Disclaimer: The Author does not hold any positions or shares in the securities mentioned in this publication.