Rackspace Hosting, Inc. (NYSE:RAX) Exploring All Options


Dallas, Texas 05/22/2014 (FINANCIALSTRENDS) – Rackspace Hosting, Inc. (NYSE:RAX) said in its regulatory filing with the SEC that it is now exploring some strategic options, This ranges from an acquisition to maybe a partnership. The company said that many different parties have now approached it to discuss some strategic relationships. Resultantly, the company has selected Morgan Stanley to evaluate these proposals that have been received & to consider the alternatives to the long-term strategy.In the report that was dated 15 May 2014, MS analysts – Simon Flannery & Lisa Lam restated their “Overweight” rating on RAX. (NYSE:RAX). They have noted that the company is the largest independent cloud provider.

The rivals

On account of its positioning, there have now been many acquisition rumors floating around for a while now. The company competes with IBM’s SoftLayer and CenturyLink’s SAVVIS, & Verizon Communications’ Terremark in this dedicated cloud industry. Within the public cloud segment, the company faces-off with Amazon’s AWS, Google’s Google Cloud, Microsoft Corporation’s Azure and Hewlett-Packard Company as well as Cisco Systems. The MS team says that the most-logical comparisons for RAX in terms of the acquisitions are SoftLayer, and SAVVIS & Terremark. All of these have been bought by the respective parent companies in the past 3 years.

The report

MS also came out with a report on the company. At the time this report was written, Rackspace Hosting had a market cap of around $4B already making it much larger than the other 3 companies. Since the time this report was written, the company’s shares have soared and its market cap is now almost $5B. Rackspace is an open cloud company that offers a very diverse portfolio of its cloud computing services, including the public and dedicated as well as private cloud, and various hybrid hosting. It is an international company that sells its services to its business customers in over 120 countries.

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