Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Louis Miscioscia - Cowen & Co., LLC.
Louis Miscioscia - Cowen & Co., LLC
Maybe you could just clarify on the inventory line, was all of the increase in inventory or almost all of it from the containers?
James D. Wheat
Yes. I would say almost all of the inventory increase in Q3 was from the buildup in the containers that we expect to ship in this Q4.
Louis Miscioscia - Cowen & Co., LLC
Did you have firm P.O.’s for that that aren’t cancelable or how would you characterize that business?
Mark J. Barrenechea
We feel pretty confident on the deliverables. We have P.O.’s in hand for Q4 delivery.
Louis Miscioscia - Cowen & Co., LLC
Can you just maybe paraphrase back to some of the conversations you had with customers as you went through September and October, and actually now that we’re here in November has the environment started to ease up a little bit as maybe credit is starting to get a tad bit easier and maybe people are starting to realize the environment we’re in is maybe not as horrible as it appeared two months ago?
Mark J. Barrenechea
In relation to the economy, I would say from the Rackable perspective we’re certainly not soothsayers on the economy but not much has changed. If I look through September and October, it’s really still the same dynamic. It remains tough and we don’t necessarily see any indicators that are going to change that here in the short term. Companies are prioritizing their projects, looking for greater return and in many cases purchasing in smaller increments. We feel we’ve reacted and adjusted pretty quickly here given that we’re in a very strong R&D cycle and well positioned to compete and win. In summary, October feels a lot like September.
Operator
Our next question comes from Mark Kelleher - Canaccord Adams.
Mark Kelleher - Canaccord Adams
Could you tell us how many containers you shipped in Q3?
Mark J. Barrenechea
We didn’t ship any containers in Q3. Our P.O.’s in hand are for Q4.
Mark Kelleher - Canaccord Adams
In the past you’ve said 20 to 50 containers this year. Is that still a reasonable number?
Mark J. Barrenechea
If I look at the ICE Cube overall, we’re certainly making progress. As we just spoke about, we’ve got firm orders for Q4, we have a new water-based design that we think’s going to be best in show, and our air-based container’s going to expand the market for us. Our goals certainly were $20 million to $50 million revenue related to the ICE Cubes and at this point we’re sort of anticipating being on the lower end of that range. But more important I think as the adoption is beginning now that we have firm orders in hand for Q4 delivery and revenue.
- To read the full transcript on Seeking Alpha, click here »
