Rackable Systems (RACK) “rebuffed more than one strategic proposal from Dell (NASDAQ:DELL)” as far back as last summer, according to a research note Wednesday by RBC Capital analyst Thomas Curlin. He says a deal with Dell was turned down “given management’s expectations for improving execution, which ultimately failed to materialize.”
Looking forward, Curling says, he thinks Rackable is following a dual strategy “whereby attempts to bring Dell back to the table are executed concurrently with a major realignment of internal processes.”
Curling says his estimates for Rackable “remain significantly below Street consensus, as we assume higher operating expenses while remaining cautious on near-term revenue visibility.”
Rumors of a Dell bid for Rackable resurfaced recently, including a story last week in the FT.
Rackable Wednesday is down 7 cents at $12.01; Dell is down 15 cents at $26.23.
DELL vs. RACK 1-yr chart: