Open Cloud Company Rackspace Hosting Experiences 48% Drop in Stock Value in 2013
Open cloud company Rackspace Hosting experienced a 48% drop in stock value in 2013 in spite of the S&P 500 index increasing 29% during the same period. The company, the founder of the OpenStack cloud software and a hybrid cloud leader, caters to "hundreds of thousands of customers" who benefit from a product portfolio that enables public cloud, private cloud and dedicated servers. The company saw a consistent fall in share value throughout the period, with only August seeing an increase of 12%.
One possible reason for the decline is the company going through a transition period while it replaces its infrastructure with the OpenStack cloud management platform. The migration has been a major investment for the company and issues arising from moving existing customers to a fresh platform also had to be addressed. While Lanham Napier, the CEO of Rackspace, suggested in 2012 that the migration would lay a foundation for growth, it appears it might have been too much of a distraction for the company.
The figures have led to enquiries regarding Rackspace's business model. The OpenStack cloud management platform is intended to be a free solution that any cloud provider can utilize free of charge. The company's intention was to transition from a provider to becoming a support services provider for companies trying to establish clouds using the OpenStack cloud management platform. Red Hat has had a degree of success with a similar model, but similar success seems to have eluded Rackspace.
Do you know of any other companies who have reported losses in 2013? Let us know the details. Add your comments below.
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