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Thursday, February 7, 2008

Rackable Systems (RACK) 4Q:07 Results

Somehow it seems inconsequential to discuss anything but Cisco but I'll try anyway.

Rackable put up a great quarter, trouncing consensus expectations by 13 cents on a non-GAAP basis due to stronger than expected margins. Then guidance came down 10% versus the street for 2008.

This is a company that had a history of trying to set the bar low and beating the crap out of estimates. Honestly, it feels like that's the set-up they're going for once again. The CFO announced his intention to resign, the stock is below book. Why not trash the consensus and give themselves a no-stretch target?

I like this stock at $8.

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