IT hosting company Rackspace Hosting Inc. (RAX) issued their third quarter earnings report after the bell on Nov. 11, and the company posted declining net profits that sent shares down sharply.
Rackspace has put a heavy emphasis on the development of their OpenStack, a public cloud technology the company is developing in conjunction with NASA. However, in a conference call with investors CEO A. Lanham Napier admitted that the company “doesn’t believe yet they’ve proven to the market” that the tech is a “game-changer.”
Throughout the earnings report Rackspace focused on a revenue bump and developments for the future, highlighting both OpenStack and recent forays into Big Data, to offset concerns about declining profits.
Revenue also fell $10 million shy of internal estimates, and the company was likewise forced to lower guidance for total 2013 projections.
For their third quarter 2013 earnings report, Rackspace reported a net gain of $16.3 million, or $0.11 per share, versus the net gain of $27.2 million, or $0.20 per share, from the same period a year ago. Revenue for the quarter was $389 million, as compared to $335 million from the same quarter the previous year. Analysts were expecting a net gain of $0.16 per share on revenues of $388 million.
Rackspace’s shares fell sharply on the diminished earnings. The company’s stock fell 11.80 percent in midday trading to hit $43.49 a share.
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