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Rackspace Hosting, Inc. (NYSE:RAX) is scheduled to report its Q2 2012 results on August 7, 2012, after the bell. The Street expects EPS and revenue of $0.18 and $317.84M, respectively.

In this article, I will recap the historical results of the company, its latest EPS estimates vs. surprises, the latest news from RAX and the news from its closest competitors.

Rackspace Hosting, Inc. Revenue and Net Income History

Recent EPS Actuals vs. Estimates

In the last quarter, it reported $0.17 EPS, just failing to meet analyst estimates of $0.18.

Rackspace Hosting, Inc. EPS Historical Results vs Estimates

The consensus EPS estimate is $0.18 based on 19 analysts' estimates, up from $0.13 a year ago. Revenue estimates are $317.84M, up from $247.23M a year ago. The median target price by analysts for the stock is $58.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On April 9, 2012, The Benchmark Company reiterated Buy rating for the company.
  • On March 26, 2012, Canaccord Genuity initiated Hold rating for the company.
  • On February 14, 2012, Stifel Nicolaus reiterated Buy rating for the company.
  • On February 13, 2012, The Benchmark Company upgraded the company from Hold to Buy.

Latest News

  • On August 1, 2012, Rackspace announced the unlimited availability of Cloud Databases and Cloud Servers powered by OpenStack, along with a powerful and elegant new Control Panel. These solutions, backed by Rackspace's renowned Fanatical Support®, further expand Rackspace's broad Cloud hosting portfolio, which is used today by over 180,000 customers worldwide.
  • On July 18, 2012, Rackspace® Hosting announced that it has upgraded its Cloud Tools Marketplace to enhance the customer experience for accessing the ecosystem of cutting-edge applications, tools and solutions. Through the Cloud Tools Marketplace, developers and enterprise IT professionals building on the open Rackspace Cloud, as well as first generation Cloud Servers, can evaluate more than one hundred industry leading technologies to deliver advanced capabilities for their environments hosted at Rackspace.
  • On February 20, 2012, Rackspace Hosting Inc annoucned that it has been selected as a vendor to the government's GBP60million G-Cloud framework. Rackspace can supply Infrastructure-as-a-Service (IaaS) and higher level Platform-as-a-Service technologies to UK Government departments.
  • On February 16, 2012, Rackspace Hosting Inc announced that it has acquired SharePoint911, which is into SharePoint consulting, training, and 'JumpStart' services within SharePoint.

Competitors

Akamai Technologies (NASDAQ:AKAM), Amazon (NASDAQ:AMZN), CenturyLink (NYSE:CTL), Oracle (NYSE:ORCL), and VMware (NYSE:VMW) are considered competitors for Rackspace and the table below provides the key metrics for these companies and the industry.

Rackspace Hosting, Inc. key ratio comparison with direct competitors

The chart below compares the stock price changes as a percentage for the selected companies for the last one-year period.

RAX Chart

RAX data by YCharts

Competitors' Latest Development

  • On August 1, 2012, Hewlett Packard Co announced that the Court ordered and declared as follows: In this action for declaratory relief, the Court finds in favor of HP and against Oracle on both the breach of contract and promissory estoppel causes of action brought by HP; The Settlement and Release Agreement entered into by HP, Oracle and Hurd on September 20, 2010, requires Oracle to continue to offer its product suite on HP's Itanium-based server platforms and does not confer on Oracle the discretion to decide whether to do so or not; The terms "product suite" means Oracle software products that were offered on HP's Itanium-based servers at the time Oracle signed the September 20, 2010 Settlement and Release Agreement, including any new releases, versions or updates of those products; Oracle's obligation to continue to offer its products on HP's Itanium-based server platforms lasts until such time as HP discontinues the sales of its Itanium-based servers; Oracle is required to port its products to HP's Itanium-based servers without charge to HP.
  • On July 31, 2012, CenturyLink, Inc.'s Savvis and Ciber announced that they have entered into an agreement under which Savvis will purchase certain assets of Ciber's global IT Outsourcing business for $7 million in cash at the time of closing, plus additional future consideration in the form of a cash earn-out payment based on results through December 2013.
  • On July 30, 2012, Oracle Corporation announced that it has entered into an agreement to acquire Xsigo Systems, a provider of network virtualization technology. Terms of the agreement were not disclosed.
  • On July 26, 2012, Akamai Technologies, Inc. announced that for third quarter of 2012, it expects revenue to be in the range of $332-$342 million and fully tax normalized earnings per share (EPS) to be in the range of $0.40-0.42. According to I/B/E/S Estimates, analysts were expecting the company to report revenue of $333 million and EPS of $0.39 for third quarter of 2012.
  • On July 26, 2012, Amazon.com announced that for the third quarter of 2012, it expects net sales to be between $12.9 billion and $14.3 billion, or to grow between 19% and 31% compared with third quarter 2011.
  • On July 26, 2012, CenturyLink, Inc. announced that it will accept $35 million from the Federal Communications Commission's Connect America Fund to deploy broadband service to 45,000 homes in unserved rural areas in multiple states.
  • On July 25, 2012, Nirvanix announced a strategic channel alliance with CenturyLink, Inc. that enables customers to access Nirvanix Cloud Storage Services at higher speeds while significantly reducing bandwidth costs.
  • On July 24, 2012, Reuters reported that VMware Inc will acquire privately held Nicira Inc for $1.05 billion in cash to expand its portfolio and establish a position in virtualized networks.
  • On July 23, 2012, Reuters reported that Amazon.com Inc. has planned to expand its mobile platform and broaden its offering of devices beyond e-readers and the Kindle Fire tablet.
  • On July 23, 2012, VMware Inc announced that for third quarter of 2012, it expects revenue to be in the range of $1.11-$1.15 billion. For fiscal 2012, it reaffirmed its revenue guidance to be in the range of $4.540-$4.635 billion.
  • On July 23, 2012, VMware Inc announced it has signed a definitive agreement to acquire Nicira, Inc., a pioneer in software-defined networking and is in network virtualization for open source initiatives.
  • On July 19, 2012, Oracle Corporation announced that announced that it has entered into an agreement to acquire substantially all of the assets of Skire, a provider of capital program management and facilities management applications available on the cloud and on-premise.
  • On July 17, 2012, VMware Inc announced that Paul Maritz will be succeeded in the post as Chief Executive Officer of VMware, effective September 1, 2012, by Pat Gelsinger, currently President and Chief Operating Officer, EMC Information Infrastructure Products.
  • On July 17, 2012, Reuters reported that VMware Inc Chief Executive Paul Maritz was leaving the maker of business software. Reuters could not confirm the report from CRN, which quoted unnamed sources as saying that Maritz would be succeeded by Pat Gelsinger, a senior executive at VMware's parent, EMC Corp Both Maritz and Gelsinger are highly regarded by the investment community.
  • On July 17, 2012, VMware Inc announced that it expects fiscal 2012 revenues to be between $4.540 billion and $4.635 billion. According to I/B/E/S Estimates, analysts are expecting the Company to report revenue of $4.58 billion for fiscal 2012.
  • On July 16, 2012, Digital Realty Trust Inc and CenturyLink, Inc.'s Savvis Inc announced the completion of the joint venture acquisition of a 164,000-square-foot (15,236-square-meter) facility in Hong Kong.
  • On July 6, 2012, Dow Jones reported that Amazon.com is developing a smartphone, Bloomberg News reported. Foxconn International Holdings Ltd of China is working with Amazon on the device.
  • On July 3, 2012, Reuters reported that Amazon.com Inc reportedly agreed on Monday to buy mapping startup UpNext. GigaOM reported that UpNext Founders Raj Advani, Vik Advani, Robin Har and Danny Moon will move from New York to Seattle, where Amazon is based, to lead the e-commerce company's mapping efforts.
  • On July 2, 2012, VMware, Inc. announced that it has signed a definitive agreement to acquire DynamicOps, Inc., a provider of cloud automation solutions that enable provisioning and management of IT services across heterogeneous environments - VMware-based private and public clouds, physical infrastructures, multiple hypervisors and Amazon Web Services.
  • On June 27, 2012, Reuters reported that Hewlett Packard Co told a judge on June 26, 2012, that Oracle Corporation should be ordered to make its software available on HP's Itanium-based servers for as long as HP sells them.
  • On June 27, 2012, QUALCOMM Inc. and Akamai Technologies, Inc. announced that the two companies are collaborating on the implementation of new protocol enhancements for mobile devices.
  • On June 26, 2012, SGS Life Science Services announced that it has selected Oracle Health Sciences LabPas to help accelerate subject recruitment, data capture and analysis, and improve workflows in Phase I trials.
  • On June 24, 2012, Reuters reported that Research In Motion, Ltd. is considering splitting its business in two, separating its struggling handset manufacturing division from its messaging network, The Sunday Times reported.
  • On June 21, 2012, CenturyLink, Inc. announced that it has won a contract renewal worth $2.1 million over the next five years to provide telecommunications services to the U.S. Army base at Fort Stewart, Ga. The contract is for one year with four one-year options.
  • On June 19, 2012, Oracle Corporation announced that for the first quarter of 2013, it expects total revenue growth on a GAAP and non-GAAP basis to range from 3% to 6% in constant currency and negative 2% to positive 1% in current rates.
  • On June 15, 2012, CenturyLink, Inc. announced that its wholly-owned subsidiary, Qwest Corporation, agreed to sell $400 million aggregate principal amount of 7.00% Notes due 2052.
  • On June 14, 2012, CenturyLink, Inc. announced that it has won a $233 million task order to provide primary managed data networking services over the next five years to the Social Security Administration (SSA) under the Networx Universal contract.
  • On June 13, 2012, Savvis, a CenturyLink company announced a strategic agreement with Hortonworks enabling Savvis to leverage Hadoop to offer cloud-based big data solutions for enterprises.
  • On June 5, 2012, Oracle Corporation announced that it has entered into an agreement to acquire Collective Intellect. Collective Intellect's cloud-based social intelligence solutions enable organizations to monitor, understand and respond to consumers' conversations on social media platforms such as Facebook and Twitter.
  • On June 4, 2012, Amazon.com and Avalon Books announced that Amazon Publishing has acquired the publication rights from Avalon Books to over 3,000 backlist titles predominantly in the Romance, Mystery and Western categories.
  • On June 4, 2012, Reuters reported according to a lawyer for Hewlett Packard Co said in court that Oracle Corp violated a clear contract with Hewlett Packard Co when it decided it would no longer make new versions of its database software compatible with HP's Itanium-based servers.
  • On May 23, 2012, Reuters reported that Google Inc.'s Android mobile platform has not infringed Oracle Corporation's patents, a California jury decided, putting an indefinite hold on Oracle's quest for damages in a legal fight between the two companies over Smartphone technology.
  • On May 23, 2012, Oracle Corporation announced that it has entered into an agreement to acquire Vitrue, a cloud-based social marketing and engagement platform that enables marketers to centrally create, publish, moderate, manage, measure and report on their social marketing campaigns and activities on social media platforms such as Facebook, Twitter, YouTube and Google+.
  • On May 22, 2012, VMware, Inc. announced that it has entered into a definitive agreement to acquire Wanova Inc., a provider of intelligent desktop solutions that centralize and simplify the management of physical desktop images while enabling users to take advantage of the native performance of a PC. Financial terms were not mentioned.
  • On May 9, 2012, CenturyLink, Inc. announced that for the second quarter 2012 it expects, Operating Revenue to be in the range of $4.55 billion to $4.60 billion and adjusted diluted EPS to be $0.59-$0.64. For fiscal 2012, it expects operating revenue to be in the range of $18.2 billion to $18.4 billion, adjusted diluted earnings per share to be $2.35-$2.55. According to I/B/E/S Estimates, analysts on an average were expecting the Company to report revenues of $4.58 billion and EPS of $0.59 for the second quarter of 2012; revenues of $18.3 billion and EPS of $2.38 for fiscal 2012.
  • On May 8, 2012, Reuters reported that Google Inc. infringed some of Oracle Corp's copyrights on the Java programming language, a U.S. jury found on Monday after days of deliberation.
  • On May 7, 2012, CenturyLink, Inc.'s Savvis announced that FXall has renewed its hosting and infrastructure services agreement with Savvis and will take additional data center space to accommodate client demand and ongoing market growth.

Technical Overview


The stock has a market capitalization of $5.80B and is currently trading at $42.90 with a 52week range of $30.34-$60.55. The stock's year-to-date performance has been -0.26%. It is currently trading below 20, 50 and 200 SMA.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Source: Earnings Preview: Rackspace Hosting