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Rackspace Hosting, Inc. (RAX)

- NYSE
  • Sep. 8, 2014, 2:05 AM
    • Following months of takeover speculation and a strategic review that started in May, CenturyLink (NYSE:CTL) is now looking to acquire Rackspace (NYSE:RAX), Bloomberg reports.
    • A deal would enable CenturyLink to better compete against competitors by expanding its offerings of Internet and cloud services.
    • Rackspace’s sales climbed 17% in 2013 to $1.5B, with $415.2M coming from cloud computing. CenturyLink’s revenue declined 1.5% to $18.1B last year.
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  • Jul. 11, 2014, 5:45 PM
    • Rackspace (RAX -5.4%) has received "only modest buyer interest" since putting itself on the block, BrightWire reports. Shares have added to the Thursday losses they saw following a re/code report stating sources have denied H-P made a bid.
    • BrightWire states CenturyLink (CTL - unchanged) "made an initial overture" to buy Rackspace, but adds its interest "was only casual and soon faded." Citi made the case for a Rackspace/CenturyLink deal last month.
    • Separately, Wells Fargo's Gary Powell says talks make him consider a Rackspace LBO deal (would involve P-E firms) unlikely, and that the market has "correctly assumed" a 70%+ probability that no strategic buyer (i.e. a tech company) will emerge.
    • Nonetheless, Powell reiterates an Outperform, and calls  Rackspace's asset value under-appreciated. He adds CenturyLink and H-P "have not completely ruled out a potential deal with RAX."
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  • Jul. 10, 2014, 12:51 PM
    • Mark Interrante, until now Rackspace's (RAX -2.1%) SVP of products and engineering, has been hired by H-P (HPQ +0.4%) to be the SVP of engineering for the company's cloud services unit
    • Both H-P and Rackspace offer cloud infrastructure (IaaS) services based on the OpenStack platform; Rackspace is an early leader within the market. H-P also offers cloud app platform (PaaS) services with the help of a partnership with Cloud Foundry (a part of EMC/VMware's Pivotal spinoff). Each company faces intense competition from Amazon, Google, and Microsoft.
    • Meanwhile, re/code states multiple sources have "categorically denied" a TechCrunch report stating H-P made a $43/share bid for Rackspace. As it is, dealReporter had expressed skepticism about the reliability of a source providing similar info.
    | 2 Comments
  • Jun. 20, 2014, 10:10 AM
    • Acquiring Rackspace (RAX +1%) would double CenturyLink's (CTL - unchanged) data services revenue, boost top-line growth, increase "customer stickiness," and "modestly [raise] leverage," writes Citi's David Phipps, making the case for a deal.
    • At the same time, Phipps estimates a deal for Rackspace ($5.3B current market cap) would require ~$6B in financing, which in turn would lead to a credit downgrade for CenturyLink.
    • CenturyLink spent $2.5B in 2011 to buy Web hosting and cloud infrastructure (IaaS) firm Savvis. But it also took a $1.1B charge last fall for its data hosting unit. The company has since bought another IaaS firm (Tier 3), and begun moving its managed data services to its cloud.
    • Rackspace, a major Web host and the top provider of IaaS services based on the OpenStack platform, has reportedly hired Morgan Stanley to evaluate "inbound strategic proposals" and other options.
    • Both Rackspace and CenturyLink are facing intense price competition from market leader Amazon, as well as Microsoft and Google.
    • Previous: CenturyLink counting on data centers, network to challenge Amazon
    | 2 Comments
  • May 15, 2014, 4:13 PM
    • Bloomberg reports Rackspace (RAX +9.6%) has hired Morgan Stanley to evaluate "inbound strategic proposals" and other options. Shares spiked shortly before the close, and are up another 1.2% AH.
    • Rackspace jumped earlier this week on a Q1 beat and solid guidance, but shares remain well off their Jan. '13 high of $81.36, thanks in part to worries about intense cloud infrastructure (IaaS) price pressure, and the impact of IaaS services on Rackspace's traditional hosting business.
    • The February retirement of CEO Lanham Napier has already fueled M&A speculation.
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  • Apr. 4, 2014, 12:01 PM
    • Vague M&A chatter is providing a boost to Rackspace (RAX +4.2%) on a down day for tech stocks.
    • The Web hosting/cloud infrastructure provider is no stranger to M&A speculation. The recent retirement of long-time CEO Lanham Napier might be making investors more willing to believe Rackspace could be sold.
    • Over 11% of the float was shorted as of March 14.
    | 8 Comments
  • Feb. 24, 2014, 11:36 AM
    • IBM (IBM +1%) is acquiring Cloudant, provider of a distributed cloud database platform for app developers. Terms are undisclosed.
    • Cloudant's customer base includes Samsung, Microsoft, Adobe, and Fidelity. The company already relies on IBM-acquired SoftLayer's cloud infrastructure platform to deliver its services, which compete against Amazon Web Services' DynamoDB and solutions based on the open-source MongoDB.
    • All three solutions rely on NoSQL, a database architecture that differs from the age-old SQL (used by IBM's DB2, as well as ORCL's bread-and-butter database) through its support for semi-structured and unstructured data.
    • This feature, along with NoSQL's superior performance and scalability for certain apps, is leading the technology to be widely adopted for handling Web/cloud services and big data projects.
    • Separately, IBM is promising to invest $1B to bolster SoftLayer's cloud software/app platform offerings. Last month, Big Blue, increasingly looking to cloud services to halt its ongoing revenue declines, said it would invest $1.2B to build 15 new data centers for SoftLayer.
    • IBM/SoftLayer rival Rackspace (RAX +2.4%) owns a piece of Cloudant.
    | 3 Comments
  • Oct. 24, 2013, 11:18 AM
    • Rackspace (RAX +1%) has acquired ZeroVM, an Israeli startup that has developed server virtualization software (i.e. a hypervisor) built with the cloud services needs in mind. Terms are undisclosed.
    • ZeroVM asserts its hypervisor is differentiated from rival solutions (VMware's vSphere, Microsoft's Hyper-V, etc.) by an ability to virtualize only the parts of a server needed for a particular app, thereby improving performance, deployment times, and resource efficiency. The company also sees its approach yielding better data security for big data/analytics applications.
    • With its OpenStack cloud infrastructure offerings facing intense price competition from Amazon, Google, and Microsoft, Rackspace has been looking to differentiate by promising better performance and service quality. ZeroVM's hypervisor could help on this count.
    • Q3 results are due on Nov. 11.
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  • Jun. 4, 2013, 9:46 AM
    IBM is acquiring web hosting/cloud infrastructure services firm SoftLayer for an undisclosed sum - with Reuters talking of a $2B+ deal price in March, there's a good chance the price tag is in ten digits. The deal represents a big expansion of IBM's cloud services push - IBM says it will create a new Cloud Services unit that combines SoftLayer with the company's SmartCloud unit. SoftLayer already claims 21K customers over 13 data centers, and IBM promises to expand its offerings to cover the OpenStack platform (previous). Rackspace (RAX -2.1%), a SoftLayer rival, top OpenStack proponent, and one-time subject of an IBM M&A rumor, is lower.
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  • May 2, 2013, 12:54 PM
    Rackspace (RAX +3.1%) catches a bid on fresh speculation IBM is considering a bid for the company - a former IBM exec told GigaOm last month the IT giant has eyed both Rackspace and rival SoftLayer as M&A targets. Rackspace's Q1 report arrives on May 8; 12.3% of the float was shorted as of April 15. (also)
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  • Mar. 15, 2013, 6:37 PM
    IBM has recently eyed both Rackspace (RAX) and SoftLayer as buyout targets, a former IBM exec tells GigaOm. Meanwhile, EMC is said to be uninterested in SoftLayer - Reuters reported yesterday both EMC and IBM have been in talks to buy the company. Rackspace (unlike SoftLayer) is a major backer of the OpenStack cloud infrastructure platform, which IBM just threw its weight behind. The former exec notes IBM's historical preference to flesh out its product lines via M&A. "IBM does not want to fund its own development because past history shows we’re not very good at it."
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  • Mar. 14, 2013, 5:42 PM
    IBM and EMC are among the companies in the running to buy Web hosting/cloud infrastructure provider SoftLayer Technologies in a deal that could sport a $2B+ price tag, Reuters reports. SoftLayer, locked in fierce competition with Rackspace (RAX) and Amazon, differentiates itself in part by offering hybrid solutions that feature both dedicated and virtual servers. The report comes as IBM targets $7B in 2015 cloud revenue, and EMC subsidiary VMware (VMW) launches a new cloud infrastructure service.
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  • Feb. 27, 2013, 11:08 AM
    Rackspace (RAX -0.2%) expands its cloud database offerings by acquiring ObjectRocket, a provider of hosted unstructured databases relying on the increasingly popular NoSQL structure. Rackspace already supports a variety of structured database platforms; NoSQL, often used in big data projects, can provide better scalability and support for unconventional data formats, at the expense of consistency. Terms aren't disclosed.
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  • Aug. 28, 2012, 11:16 AM
    Rackspace (RAX) is acquiring Mailgun, a startup that has created developer tools for accessing/managing e-mail from within an app or service without having to go through a complex/tedious setup process. Rackspace plans to integrate Mailgun's solutions with its newly-launched OpenStack cloud infrastructure platform.
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  • Jun. 20, 2012, 2:05 PM
    Rackspace (RAX -1.7%) is turning into a compelling M&A target, a Bloomberg column suggests, albeit without reporting on any specific interest. The article notes the increasingly competitive market for cloud infrastructure services, in which Rackspace is #2 behind Amazon (AMZN), is expected by Gartner to grow to $10.5B in 2014 from $3.7B in 2010. However, with a current market cap of $6B, Rackspace wouldn't come cheap, and the company claims it's not for sale.
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  • Mar. 13, 2012, 11:53 AM
    Rackspace (RAX +2.6%) is outperforming, and takeover speculation could be a reason why. Rackspace, which currently trades at $54.38, is seeing heavy buying of April calls at strike prices of 60 and 65.
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Company Description
Rackspace Hosting Inc, through its operating subsidiaries, is a provider of cloud computing services, managing web-based IT systems for small and medium-sized businesses as well as large enterprises.