Rackable Systems Announces $40 Million Stock Repurchase Program

Rackable Systems, Inc. (NASDAQ:RACK), a leading provider of servers and storage products for medium and large-scale data centers, announced today that its Board of Directors has authorized the company to institute a stock repurchase program providing for the repurchase of up to $40 million of the company’s stock.

"The repurchase program announced today reflects the Board of Directors’ continued confidence in the company’s near and long-term financial and operating performance and commitment to enhancing shareholder value,” said Mark J. Barrenechea president and CEO of Rackable Systems. "With over $181 million in cash and investments, and no debt, we have the strategic flexibility to institute a repurchase program, maintain sufficient capital for operations and innovation, and continue to pursue investment opportunities. At current price levels, we believe Rackable’s common stock represents an attractive investment opportunity for the company.”

The duration of the repurchase program is open ended. Under the program, the company is able to purchase shares of common stock through open market transactions and privately negotiated purchases at prices deemed appropriate by management. The timing and amount of repurchase transactions under this program will depend on market conditions, corporate and regulatory considerations, alternative investment opportunities, and other relevant considerations. The program may be discontinued at any time by the Board of Directors.

As of February 10, 2009, Rackable systems had approximately 30 million common shares outstanding.

About Rackable Systems

Rackable Systems, Inc. (NASDAQ:RACK) is a leading provider of Eco-Logical™ servers and storage products for medium to large-scale data center deployments. The company's products, available for purchase or lease, are designed to provide benefits in the areas of density, thermal efficiency, serviceability, power distribution, data center mobility and remote management. Founded in 1999 and based in Fremont, California, Rackable Systems is a founding member of The Green Grid and serves cloud computing and services, enterprise software, federal government, digital media, financial services, oil and gas and high performance-computing customers worldwide.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements, including statements regarding Rackable Systems’ stock repurchase program. Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Rackable System’s stock repurchase program may not have its desired or intended effect. Actual results may differ materially from forward-looking statements due to a number of risks and uncertainties, which include the risk that market conditions may adversely affect Rackable’s ability to implement the program or its outcome; economic conditions impacting the purchasing decisions of Rackable Systems’ customers; Rackable Systems operates in a very competitive market, and increased competition has in the past, and may continue, to cause pricing pressure on Rackable Systems’ products, which would negatively affect Rackable Systems’ gross and operating margins, as well as other financial measures; a significant portion of the Company’s revenues come from a small number of customers, and so the delay in placing an order, or the failure of a significant customer to place additional orders, could have a significant negative effect on Rackable Systems’ financial performance; orders for Rackable Systems’ products can be received at the end of the quarter, and so a delay in placing an order in the fourth quarter could have a significant negative effect on Rackable Systems’ financial performance for the year; Rackable Systems is unable to control component pricing, such as DDR memory pricing as has happened in the past, and as a result component pricing can rise unexpectedly, negatively impacting Rackable Systems’ gross margins as well as other financial measures; Rackable Systems may be required to write-off additional significant amounts of excess and obsolete inventory; and new products by competitors may come on the market, which would decrease the demand for Rackable Systems’ products. Detailed information about these and other potential factors that could affect Rackable Systems’ business, financial condition and results of operations is included in Rackable Systems’ annual report on Form 10-K under the caption "Risk Factors,” in Part I, Item 1A of that report, filed with the Securities and Exchange Commission ("SEC”) on March 13, 2008, as updated by Rackable Systems’ subsequent filings with the SEC, all of which are available at the SEC’s Web site at www.sec.gov. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Rackable Systems undertakes no responsibility to update the information in this report.