Buy, Sell or Hold: Is Rackspace’s Cloud Being Vaporized?
July 25, 2013
Grazed from MoneyMorning. Author: David Mamos.
Rackspace Hosting (NYSE: RAX) is currently the number two provider of cloud computing. The company has been under the microscope lately as its stock has dropped nearly 45% year-to-date. But the microscope is not just fixated on Rackspace, it’s also focused on the entire cloud computing sector. This sector is growing rapidly with analysts speculating enthusiastically that the overall cloud market could reach anywhere from $40 billion to $70 billion by 2016 or earlier.
But with extreme growth comes extreme competition. This competition is not coming from the under $6 billion market cap companies similar to Rackspace. The company’s competition comes from the largest names in tech – Microsoft and industry leader Amazon. For those unfamiliar with the term "cloud computing" the business is quite simple to describe…
Basically, all the large computers, processing and computer data, which are presently sitting in companies and offices across the globe are being replaced by leased machines such as Rackspace’s, which are housed and maintained in a secure environment. Everything is managed over the internet…
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