- "Because Rackspace (RAX +18.4%) operates the largest production deployment of OpenStack and is the [#2] public cloud provider to [Amazon], it could be a strategic asset to other companies ... such as AT&T, IBM, EMC, HP, and VMware," says Blair's Jim Breen following a Bloomberg report about Rackspace's hiring of Morgan Stanley to evaluate "inbound strategic proposals."
- Worth noting: IBM, H-P, AT&T, and VMware already offer their own cloud infrastructure services, and VMware supports an OpenStack rival (its vCloud platform). Moreover, any potential buyer will likely take a close look at Rackspace's long-term ability to handle Amazon/Microsoft/Google's aggressive pricing.
- Nonetheless, the Street sees plenty of possibilities, given Rackspace's size and OpenStack software/services investments. Dell and Cisco are a couple of the other names brought up. Blair thinks Rackspace could get $54/share, given recent deal prices.
- Over 11% of the float was shorted as of April 30. Shares are up 29% since Bloomberg's report broke just before Thursday's close.