Rackspace Down On Slowing Cloud Computing Growth
February 13, 2013
Grazed from Investors Daily. Author: Reinhardt Krause.
Rackspace Hosting (RAX) late Tuesday reported fourth-quarter sales below estimates, as cloud computing growth slowed, sending shares down in after-hours trading. Rackspace said Q4 revenue rose 24.5% to $352.9 million. Analysts polled by Thomson Reuters expected sales of $355.4 million. Rackspace posted Q4 profit, minus items, of 21 cents a share, up 17% from a year earlier, in-line with estimates.
Rackspace garnered 24.7% of Q4 sales from cloud computing products, up from 20.6% in the year-earlier period. Rackspace said cloud sales rose to $87.3 million in Q4, up 49% from the year-earlier quarter. But Q4 marked more slowing in cloud growth. Cloud revenue rose 69% in Q2 and 57% in Q3 year over year. Adjusted earnings rose 27% to $130 million, Rackspace said…
"Year-over-year growth has now decelerated for five quarters in a row," said Cowen analyst Colby Synesael, who says the company didn’t deliver on its high valuation. San Antonio-based Rackspace still garners most of its revenue from website-hosting services. In Q4, managed hosting revenue rose 18% to $265.6 million. "Revenue was a little below consensus but sequential growth trends were in-line with last quarter," said William Blair analyst Jim Breen. "Stronger margins helped beat EBITDA." In Q4, Rackspace said capital spending rose 11% to $88 million from a year earlier…
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