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  • Buy A Chipotle Burrito, Not The Stock [View article]
    Thanks Bickett, we appreciate your feedback. We'll continue to keep an eye on this stock.
    Jul 3 11:12 AM | Likes Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    Wow, thanks for that insight Steveto! That was really interesting, I always like to hear from people with experience in the industry.
    Jun 29 12:27 PM | Likes Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    Okay, you raise some good points. For the demand side: I think that there is a lot of future demand for cloud services, but I don't see the cloud being able to fulfill that demand in its current form. Before large corporations enter the cloud en masse, the concern around latency and security will have to be solved. These are fundamental issues that are not easily addressed without significantly changing the current architecture of cloud computing. Increasing security, decreasing latency, and providing high levels of uptime will significantly increase costs to a point where a "private" cloud makes more sense than a public cloud. http://www.san.uri.br~ober/arquivos/orienta... These problems will eventually be solved, but I don't see it happening in the short-term future.

    I used the fiber industry to illustrate the importance of getting the supply side right -- not because I see the cloud industry displaying the exact same supply dynamics. Instead of a supply gut, I see increased price competition as existing and current companies scramble to grab market share in the industry. This competition is largely dependent on price and will drive prices and margins down. I don't believe IaaS can survive its current status as a cash cow with this many corporations vying for market share.

    I don't mean to sound too negative -- I don't believe cloud computing is a fad, I just believe these companies are trading at valuations that do not support a more earth-bound growth trajectory and increased competition.
    Jun 29 12:22 PM | Likes Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    Good call-out on Firehost. I'm not an expert on Firehost, but I think their concentration on being Hippa compliance is pretty brilliant. A lot of financial and medical companies are governed by regulations that ensure a minimum level of security where customer data is concerned. That could be a huge and profitable market.
    Jun 28 04:34 PM | Likes Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    I think you're definitely right about IaaS being provided as part of a package deal along with PaaS and SaaS, it seems like Amazon is already trying to lead people in this direction.

    I also think you raise a good point that specialization may be necessary in order to support the various software and hardware requirements. It'll be interesting to see how that plays out, because most of the cloud companies have kept their software and hardware fairly uniform in order to increase economies of scale and decrease the number of systems employees must learn. The average employee to server ratio as of 2010 was 1:1000. http://bit.ly/L5apqc~badri/552dir/papers/i... It seems like the move to offer PaaS and SaaS will force a decrease in this ratio.

    I'm curious, what do you think of Rackspace's current business plan?
    Jun 28 04:10 PM | Likes Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    I don't like it!
    Jun 28 03:55 AM | Likes Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    Agree that hosting companies are not very good at software development. That's why I can't really fault Rackspace for trying OpenStack. The quality of the software will likely depend on getting companies like Dell and AT&T to contribute to the code base, instead of merely contributing to the OpenStack foundation like they are doing now.
    Jun 28 03:54 AM | Likes Like |Link to Comment
  • Buy A Chipotle Burrito, Not The Stock [View article]
    What is CME? Are you referring to Chipotle, which is CMG?
    Jun 27 10:17 PM | Likes Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    I agree, SMBs will be key to Rackspace's success or failure. And I've started to hear rumblings about RAX not having amazing customer service. I guess trademarking "Fanatical Support®" doesn't guarantee you'll actually have it in practice haha
    Jun 27 09:49 PM | Likes Like |Link to Comment
  • Buy A Chipotle Burrito, Not The Stock [View article]
    Thanks for the comment Moon! I have to disagree though. Chipotle is almost single handedly revolutionizing the fast-casual industry. More and more quick-service restaurants are transitioning into a more fast-casual type of approach because they see the success restaurants like Chipotle are having. If it was just a fad restaurants like California Pizza Kitchen would not be making brand extensions into the fast-casual segment by introducing CPK ASAP. The quality of food Chipotle is able to produce at their current price-point is unparalleled across the restaurant industry, which is why they are here to stay. Again, I am arguing against Chipotle's valuation, not it's fundamentals.
    Jun 27 03:30 PM | 1 Like Like |Link to Comment
  • How New Competitors Will Hurt Rackspace [View article]
    Thanks for reading Jaimi. You're right, Rackspace is the unparalleled leader in customer support. There is a possibility that competitors never match Rackspace's support for small-businesses and Rackpace remains the king of a profitable niche. However, even if that happens, I'm not sure if Rackspace's valuation can support that outcome. At a recent conference http://bit.ly/NNq2kz the CFO answered questions about OpenStack, and the company told analysts that one reason for the transition to OpenStack was that it enabled Rackspace to compete against Amazon for large clients like Netflix. I believe sentiment will move against this stock if investors realize that these large enterprise clients are not in play, even if Rackspace continues to be highly profitable in the smaller niche.
    Jun 27 12:31 PM | Likes Like |Link to Comment
  • Based On Latest Earnings, Red Hat Is Fairly Priced At $55 [View article]
    Use what Red Hat CFO Charlie Peters have said: "When times are good, the company stresses the value of its software. In a down cycle, it talks about the cost savings, a message that resonates with customers whose budgets have been slashed." In either way, Red Hat and its customers win.
    Jun 27 12:01 PM | Likes Like |Link to Comment
  • Despite slight indications of Facebook (FB) bottoming out, Wallstcheatsheet.com's Damien Hoffman says to keep selling. Why? Three reasons. First, the company's strategy appears desperate. Second, FB's valuation is absurdly risky. Buying at these levels is a high risk, low reward proposition. The third and final reason, competition is heating up in the social network space, and niche networks are likely the next wave of the future that will overtake the company's one-size-fits-all format.  [View news story]
    Whether you want to believe it or not, FaceBook will only get bigger in the future. Competition in the social media industry is unique because people don't have a problem having multiple profiles at multiple sites, so even if new social networks pop up, I don't think FaceBook will necessarily suffer as much as people think.
    Jun 11 04:11 PM | Likes Like |Link to Comment
  • Facebook's (FB) member and usage growth is slowing sharply in the U.S., data from comScore shows, although that's partly because it's the most dominant site: Facebook has 71% of Internet users and draws them in for six hours a month. The main areas of expansion are mobile and overseas, although neither has yet proved as lucrative as Facebook's main business.  [View news story]
    Regardless of where you draw the exact lines defining the market, when you consider that almost half all global internet users access FaceBook on a monthly basis (900 million of the roughly 2 billion users), it's really scary that it still grew its montlhy active users 33% over last year.

    Zuckerberg's problem isn't growing the user base anymore because his current users do that for him, it's now monetizing that user base and turning it into revenue.
    Jun 11 04:04 PM | Likes Like |Link to Comment
  • Cash Rich Companies Choosing Stock Repurchases Rather Than Dividend Hikes - Part XVI [View article]
    The stock buyback program for O'Reilly is certainly interesting. We like the fundamentals and management behind O'Reilly, and believe that they are one of the strongest coompanies in the auto parts industry. Hopefully the stock buyback program can temper some of the fears around O'Reilly as the economy becomes more unpredictable.
    Jun 11 04:04 PM | Likes Like |Link to Comment
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