Revenues were up 40% year over year to $80.5 million, with higher-margin storage revenues comprising 16% of revenues, up from 8% last year. With gross margins of 21.4% for the quarter, and a net loss of nearly $400,000, it's clear that volume will continue to drive the company's top line. Strong margins and profits will have to come from the storage business.
Major customers for this small company include giants like Amazon.com
I think Rackable currently maintains a slight competitive edge over competitors like Sun Microsystems
In addition, the company has designed its servers to be as compact as possible. With companies like Google
While I have a soft spot for bleeding-edge technology, I've also learned that red-hot technology doesn't always make a smart investment. Rackable's anything but cheap, trading at roughly 50 times management's 2007 earnings estimate. With margins as low as they are, I need to see this story develop further before I consider risking my hard-earned capital.
We've served up further Foolishness: