Rackspace shares soar as company explores acquisitions, partnerships

May 19, 2014
Austin Business Journal

Shares of Rackspace Hosting moved sharply higher Friday on the news that the company has hired investment banker Morgan Stanley to help find strategic ways to expand its business through partnerships or acquisitions, Bloomberg reports


The move comes shortly after Rackspace competitors Amazon.com Inc. and Google Inc. both cut prices on competing products faster than expected


Rackspace shares were up $5.99, or 19.5 percent, to $36.67 by late morning in heavy volume


The company has a strong Austin presence as the area's 47th-largest employer in the region, according to the Austin Business Journal Book of Lists. It has 482 local employees


Despite reporting first quarter sales that surpassed analysts’ expectations, the San Antonio-based cloud services and hosting company is on track for slower overall growth for the third straight year. But Rackspace co-founder and CEO Graham Weston is hopeful that the company can still differentiate its high-quality services from cheaper, raw-computing alternatives


Gartner Inc. projected the worldwide public cloud-services market would jump 19 percent last year to $131 billion. But while industry growth has been strong, competition within the sector has grown fierce and that has hurt Rackspace in the market


Since climbing to a record in January 2013, Rackspace’s stock (NYSE: RAX) has plunged more than 60 percent


Print Article opens in new window