The lawfirm Glancy Binkow, Goldberg LLP is filing a class action lawsuit on behalf of investors who had purchased or acquired the securites of Rackable Systems, Inc. Class plaintiffs who purchased or otherwise acquired securities from the above mentioned firm, from between October 30, 2006 and April 4, 2007, known as the class period, are included in the lawsuit.
The lawsuit charges Rackable and some of the company's former executive officers with the violation of certain federal securities laws.
Rackable designs, manufactures and implements highly scalable computer servers and high-capacity storage systems.
The complaint against the company alleges that throughout the class period, the defendants disregarded the fact that most of the information they were presenting to the public, about the performance of their overall business, their operations and their future prospects, were materially false and misleading. The company could not continue like this for long. In January, 2007, Rackable shocked the market when it disclosed its report for the financial results for the fourth quarter of 2006. These results showed that the company had achieved a gross margin of only between 19.2% and 19.7 percent. After this news was disclosed, Rackable's share prices crashed by $12.44 per share. This trend continued in February when the company declared the results of its fourth quarter financial results and again in April when the company announced that their non-GAAP gross margins would be 30% lower than what they had expected owing to the intensity of competition in three of the company's largest accounts.
To read the details of the case check out the complete article on msnbc.com here.
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