"Open Cloud" Service Rackspace Inc. (RAX) Plummets

Jacob Harper |

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.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
RAX Rackspace Hosting Inc n/a n/a n/a 0 Trade
CBGPY Close Brothers Group Plc (United Kingdom) ADR 32.90 0.00 0.00 0

Comments

Emerging Growth

Winston Gold Corp.

Winston Gold Mining Corp is a mineral exploration and development company. The Company is engaged in acquiring, exploring, developing, and operating mining properties.

Private Markets

Voleo

Voleo is a free download that allows you to form investment clubs with your friends, family, colleagues, classmates, teammates…basically anyone you know and trust. Invest and manage a stock portfolio…

The Green Organic Dutchman

The Green Organic Dutchman Ltd. ("TGOD") produces farm grown, organic cannabis for medical use. The company grows its high quality organic cannabis in small batches using craft growing, all natural…