Bronstein, Gewirtz & Grossman, LLC Announces That a Class Action Has Been Filed Against Rackable Systems, Inc.

NEW YORK, NY--(Marketwire - January 22, 2009) - Bronstein, Gewirtz & Grossman, LLC announces that a class action lawsuit has been filed in the United States District Court for the Northern District of California on behalf of those who purchased or otherwise acquired the securities of Rackable Systems, Inc. ("Rack" or the "Company") (NASDAQ: RACK) between October 30, 2006 and April 4, 2007, inclusive (the "Class Period").

The Complaint alleges that throughout the class period defendants deliberately or recklessly disregarded that their public statements concerning the Company's business, operations and prospects were materially false and misleading. Specifically, the Complaint alleges that defendants' public statements were false and misleading or failed to disclose or indicate the following: (1) that the Company was experiencing competitive pressure; (2) that competition was increasing; (3) that, due to increasing competition, the Company was able to maintain and expand its customer base only by aggressively lowering its contract prices; (4) that, as such, the Company was experiencing dramatic erosion of gross margin attainment in the Company's largest accounts as focused competitors aggressively dropped prices; (5) that price increases for DDR (double data rate) memory were accelerating faster than the Company represented to investors; (6) that, as a result of the above, the Company was unlikely to meet its quarterly gross margin targets; (7) that the Company lacked effective internal and financial controls; and (8) as a result of the foregoing, that statements made by the Company and management during the Class Period concerning the Company's business, operations and prospects were lacking any reasonable basis.

On January 17, 2007, shares of Rack declined $12.44 per share, more than 38%, to close at $19.98 per share, on unusually heavy trading volume. The decline in the stock was as a result of the news that was reported one day earlier. Rack shocked the market when it reported preliminary financial results for the fourth quarter 2006 and that the Company had achieved a gross margin of between only 19.2% and 19.7%.

Racks shares continued their downward slide once again on April 4, 2007. Rack further shocked the market when the Company revealed that its GAAP and non-GAAP gross margins for first quarter 2007 would be approximately 30% lower than the Company's previously communicated expectations and that the primary factor impacting gross margins in the first quarter was the intensity of competition in the Company's three largest accounts. On this news, shares of Rack declined $2.64 per share, more than 15%, to close on April 5, 2007, at $14.24 per share, on unusually heavy trade volume.

No Class has yet been certified in the above action. If you wish to review a copy of the Complaint, to discuss this action, or have any questions, please contact either Peretz Bronstein or Eitan Kimelman of Bronstein, Gewirtz & Grossman, LLC at 212-697-6484 or via email eitan@bgandg.com. Those who inquire by e-mail are encouraged to include their mailing address and telephone number. March 17, 2009 is the deadline for investors to seek a lead plaintiff appointment.

Bronstein, Gewirtz & Grossman, LLC is a corporate litigation boutique. Our primary expertise is the aggressive pursuit of litigation claims on behalf of our clients. In addition to representing institutions and other investor plaintiffs in class action security litigation, the firm's expertise includes general corporate work, private securities offerings, and securities arbitration.

Contact Information: Contact: Peretz Bronstein or Eitan Kimelman Bronstein, Gewirtz & Grossman, LLC 212-697-6484