Rackspace Insists It Will Stay Independent Amid Takeover Talk
02 4월 2011 - 12:44AM
Dow Jones News
Rackspace Hosting Inc. (RAX) Chief Executive Lanham Napier
insists his company is focused on remaining a stand-alone player
even as deal chatter within the data-storage sector
intensifies.
Rackspace, a data-center operator in the hosting and so-called
cloud computing industry, has seen its share price soar 45% since
January amid strong revenue growth and continued takeover
speculation. The stock, which has nearly tripled in price from a
year ago, hit a fresh all-time high Friday as Wall Street continues
to bet Rackspace is an attractive candidate to be acquired.
But Napier maintained he is focused on keeping Rackspace
independent and will continue to explore partnerships and small
acquisitions.
"I think the merger-and-acquisition speculation is a massive
distraction," Napier said in an interview with Dow Jones Newswires.
"We love our business, and we are an organic-growth company. We're
looking at start ups that share our values and believe in our
mission of being a leader in service cloud computing."
Rackspace, Dell Inc. (DELL) and Equinix Inc. (EQIX) said earlier
this week that they have collaborated to develop an open-source
cloud-computing platform--dubbed OpenStack--which is aimed to
compete against Amazon Inc.'s (AMZN) Web Services. Rackspace late
last year said it acquired Cloudkick, a web-application provider
that helps to manage servers. Napier said these are examples of the
strategic roadmap Rackspace wants to keep pursing in the
future.
The takeover chatter surrounding Rackspace, Savvis Inc. (SVVS)
and other cloud-service providers follows Verizon Communications
Inc.'s (VZ) recent announcement to acquire Terremark Worldwide Inc.
(TMRK) in a $1.4 billion deal and Time Warner Cable Inc.'s (TWC)
deal to take over NaviSite Inc. (NAVI) for about $230 million. Both
deals earlier this year highlight the attractiveness of
up-and-coming cloud-services providers to larger and more
established companies.
Businesses are showing a greater interest in cloud computing,
which enables more cost-efficient access to computer servers and
data storage over the Internet and internal networks. Data tracker
In-Stat LLC has said U.S. spending on cloud computing and managed
hosting should surpass $13 billion in 2014, up from less than $3
billion in 2010.
"The cloud-computing category is white hot," Napier said. "And
now you have tech incumbents with cash that are trying to buy their
way in."
Business spending is starting to pick up again coming out of the
recession. Companies are slowly becoming more comfortable investing
in technology now that sales and profits have not only stabilized
but are expanding.
"If I was to say a year ago I was cautiously optimistic about
business spending, then this year in general I'd say the caution is
down and the optimism is up," Napier said. "But do not infer things
are ripping, and we're back off to the bucking-bronco days because
we're not."
Rackspace last month reported better-than-anticipated
fourth-quarter revenue, due in large part to increased demand for
its hosting services. For 2011, Rackspace said it expects revenue
growth to exceed the 24% growth rate achieved last year.
But analysts have questioned the capital-intensive nature of
Rackspace's business model, especially because the company's
capital-expenditure guidance will likely be higher than its revenue
trajectory for 2011.
"Our business will always be relatively capital intensive," he
said, largely because the company regularly has to upgrade its
infrastructure. "The magic is in the margin of service layer we add
on top of that infrastructure. We're making investments to continue
to make the business more capital efficient, but we have more work
to do on it."
Napier's insistence on keeping Rackspace independent contrasts
with recent remarks from competitor Savvis CEO Jim Ousley. He has
acknowledged that he has had more strategic discussions than usual
with bankers and inquiring partners. But Napier said he remains
focused on growing his company as a stand-alone player.
"I absolutely have a fiduciary obligation, and I work for the
stockholders," he said. "But we're trying to build something great,
and greatness isn't achieved overnight. We're just getting going.
When I think about the market opportunity to build the service
leader in cloud computing, I think little old Rackspace will win
that one."
-By Steven Russolillo, Dow Jones Newswires; 212-416-2180;
steven.russolillo@dowjones.com
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