16-05-2014, 14:17 #1
[EN] Rackspace’s latest filing reads like a for-sale sign
Rackspace Hosting, one of the last major U.S. cloud infrastructure service providers that have not been swallowed by giants, is getting serious about a partnership with a bigger player or an outright acquisition.
The Windcrest, Texas-based company has hired Morgan Stanley to evaluate a number of proposals it has received. “In recent months, Rackspace has been approached by multiple parties who have expressed interest in exploring a strategic relationship with Rackspace, ranging from partnership to acquisition,” Rackspace representatives wrote in a filing with the U.S. Securities and Exchange Commission Thursday.
Morgan Stanley is on board to look at the existing proposals as well as other alternatives for advancing the company’s strategy.
Rackspace spokesman did not provide any comment beyond the statements included in the filing. The company said it would not talk about this process publicly until its board made a decision on a specific partnership or transaction.
The deal could put Rackspace’s public-market investors out of their misery. The stock has generally been on a decline since January 2013, and in after-hours trading today, the stock was up more than 8 percent. The stock closed for the day at $30.68.
We heard independently a couple of months ago that Rackspace might end up being bought.
That tidbit wasn’t surprising. As Amazon announces one price cut after another for its manifold public cloud services — and competitors like Microsoft and Google do, too — Rackspace executives have said it’s quite happy to sit out the price wars, thank you very much.
And managed hosting, other companies have been coming up quickly. Linode and DigitalOcean in particular have attracted developer interest in the past few years.
Altogether, Rackspace’s net revenue growth has slid from more than 32 percent in 2011 to 15.6 percent at the end of last year.
That leaves Rackspace to try out vertical-specific strategies like a focus on digital marketing and a startup incubation program that could help it attract young developers to use the company’s infrastructure.
But such initiatives might be too little, too late. Amazon Web Services has jump-started infrastructure-as-a-service — renting out slices of physical servers for developers to build apps on and only pay for what they use — and Rackspace hasn’t kept up, even with its pioneering role in the OpenStack open-source cloud software project.
Rackspace CEO Graham Weston said the giants’ price cuts would not have as much of an effect as many would think, since Rackspace was after a different customer base. The big players cater to developers who want raw compute and storage resources deployed in the cloud, while Rackspace is after companies who choose to outsource cloud infrastructure deployment and management to an outside expert.
Rackspace has other giants to compete with, however: giants who have bought up companies it used to compete with toe-to-toe. They include Verizon, which bought Terremark, CenturyLink, which bought Savvis, and IBM, which now owns SoftLayer.
Those are the companies Rackspace sees as its direct competition, its president Taylor Rhodes said on the earnings call this week.
Being acquired by or entering into a tight partnership with a company of similar caliber would give Rackspace more fire power to compete with those firms. The data center footprint it has built out and the technology those data centers house are far from trivial.
Rackspace engineers were on the original team that created OpenStack, the open source cloud infrastructure software that has since become the de facto standard cloud architecture alternative to proprietary clouds from the likes of Amazon. Rackspace reportedly has the largest production deployment of OpenStack in the world.
The company operates nine data centers in six markets, including Chicago, Dallas-Fort Worth, northern Virginia, London, Hong Kong and Sydney. Those facilities house more than 100,000 servers.
16-05-2014, 14:35 #2
AT&T, HP, EMC, Cisco and IBM loom as possible buyers of Rackspace Hosting...
Rackspace's stock rose 14% before the market open in the stock market today. Shares in Rackspace popped 7% on Thursday — mostly on last-minute spike — after Bloomberg reported that Rackspace made a regulatory filing. Rackspace said in the filing that "multiple parties" had approached the company about a takeover or alliance.
Analysts have said Rackspace needs more corporate customers to commit to OpenStack, the cloud computing software it co-developed and has championed as an industry standard.
"Because Rackspace operates the largest production deployment of OpenStack and is the second-largest public cloud provider to Amazon Web Services, it could be a strategic asset to other companies in the OpenStack ecosystem, such as AT&T, IBM, EMC, HP, and VMware," said Jim Breen, an analyst at William Blair & Co., said in a report published on Friday.
Oppenheimer analyst Tim Horan also names HP and AT&T as possibilities.
Andrew Nowinski, analyst at Piper Jaffray, adds Cisco to the list of potential buyers or partners.
"Cisco announced plans last month to launch a public cloud offering, called InterCloud. The head of Cisco's new cloud initiative, Edison Peres, stated 'you can't deliver hybrid IT experiences to customers if there isn't an element of managed services and cloud.' We agree, and that is precisely what Rackspace offers," Nowinski said in a report.
Jonathan Schildkraut, analyst at Evercore Partners, said: "As a company which has had a leadership role in the development of cloud technology, but has faced challenges in penetrating the enterprise vertical, we believe a strategic partnership or acquisition could be a beneficial outcome for Rackspace."
"At this point, valuation may be driven by considerations beyond intrinsic value, including potential synergies from acquisition. Notably, SoftLayer, a similarly positioned private peer, was acquired by IBM (in 2013) for $2 billion," he added.
16-05-2014, 14:47 #3
Rackspace soars on buyout talk
Shares of Rackspace Hosting, Inc. skyrocketed today, climbing as much as 20% and adding about $1 billion to its market cap.
Rackspace’s stock price hit the metaphorical clouds after it announced the hiring of Morgan Stanley to consider selling all or part of the company.
The huge growth in cloud computing, essentially renting computer servers connected to the Internet instead of owning them, so far has been largely about the basic, foundational services. As the trend expands, however, analysts expect growing demand for fuller service offerings, so-called hybrid clouds that include a lot of software and customization.
IBM bought Softlayer Technologies last year for about $2 billion to jumpstart its cloud offering but could still be looking for additional scale through another acquisition. Similarly, Verizon paid $1.4 billion for Terremark back in 2011.
Other flailing tech giants such as Hewlett-Packard, Dell and Cisco Systems might be the most likely buyers, notes Credit Suisse analyst Sitikantha Panigrahi.
“The adoption of hybrid cloud by enterprises represents the next phase of growth in the overall cloud market, further illustrates the shift in the battlefield from hardware to cloud, and places increasing secular pressures on hardware companies to offer cloud services to enterprises,” Panigrahi wrote on Friday. “HP, Dell, and Cisco have expressed intentions to be players in cloud computing, and have been active in the space but have yet to make any acquisitions.”
Other analysts suggest AT&T or EMC could be potential bidders.
Rackspace traded as high as $54 last fall and a strategic bidder might be willing to pay a similar price now, some analysts say. Panigrahi set a $47 price target while William Blair analyst Jim Breen favors the $54 level.
For previously disappointed Rackspace investors, either price would provide welcome relief after a miserable start to the year.
Última edição por 5ms; 16-05-2014 às 14:56.
16-05-2014, 15:07 #4
Rackspace Looks At Exit Options
On the one hand this news is sad – Rackspace has been an important player in the industry. But it also indicates that we’re seeing a real rationalization start to take shape. The removal of a few bit players and the consolidation of some others will leave us with less diversity, but also more clarity for customers when it comes to decision making time.
Previously dwarfed by the number one player, Amazon Web Services, the San Antonio-based company now has to contend with some very strong cloud infrastructure plays from others including Microsoft , Google and IBM – all companies with far bigger footprints, and deeper pockets than it has.
Several years ago, seeing the obvious difficulty involved with competing on this playing field, Rackspace co-founded the OpenStack initiative, hoping to parlay an open source cloud platform into commercial success for itself – since then it has had a few different strategic focuses – first differentiating through “fanatical support”, later a focus on building clouds for telcos and other Managed Services Providers, more recently forays into the all-too-busy private cloud space. Rackspace is a company that has been cornered with every turn – it was always hard to see how it could really break out of its bit-player position.
When you add to that the fact that it was trying to compete in a market that is characterized by incredible levels of capital investment, you’ve got a difficult situation for a smaller vendor. Seemingly every week there is another announcement from IBM, HP, Cisco or another large vendor of a $1B cloud investment – much of this, of course, goes to building out global data center footprint. While on the one hand the $1B figure can be seen as simply marketing spin, it is indicative of the sort of numbers that are needed to even have a seat at the table. For an insight into just how important capital investment is for a public cloud vendor, one only needs to look at this comparative chart produced by The Register:
Rackspace has spent around $1B in cloud investment since 2005, a massive number for sure, but dwarfed by the numbers its competitors have invested. It comes as little surprise then to hear that Rackspace is looking at its options.
16-05-2014, 15:17 #5
- Data de Ingresso
- Oct 2010
- Rio de Janeiro
Que seja a IBM-SL... Os outros listados não vão ter muita margem de conhecimento...
16-05-2014, 15:26 #6
Rackspace's Up for Sale. Will Microsoft Make a Bid?
Brutality of cloud economics means 100,000 servers are no longer enough.
Rackspace, the largest independent cloud hosting provider, said multiple bidders have expressed interest in acquiring it. As a result, Rackspace has made it official that it's looking to sell. The company has hired the investment bank Morgan Stanley to evaluate proposals and the company's options.
In a filing late Thursday with the SEC, Rackspace revealed the move, saying it has "been approached by multiple parties who have expressed interest in exploring a strategic relationship with Rackspace, ranging from partnership to acquisition." Rackspace's future has been in question since CEO Lanham Napier stepped down in February. At the time, I wondered if Rackspace would put itself on the market. The board said it is looking for a new CEO but the company has yet to name one.
While Rackspace is profitable, it's being squeezed by larger players such as Amazon Web Services, Microsoft and Google. Rackspace these days is best known for stewarding the OpenStack open source cloud compute storage and networking standards -- a move aimed at providing an interoperable cloud and an alternative to market-leader Amazon.
Many key cloud providers support OpenStack including IBM, Hewlett Packard and AT&T, as well as many smaller providers. OpenStack, also is working its way into Linux servers, making it the cloud operating system of choice for those users.
But the three largest cloud providers -- Amazon, Microsoft and Google -- don't support OpenStack, though orchestration tools such as Puppet, Chef and numerous other third-party offerings enable some levels of interoperability.
Of course the Rackspace cloud servers and storage are now OpenStack-based. Rackspace made a big strategic bet when it teamed up with NASA over four years ago to contribute to the OpenStack code it codeveloped with the open source community. Making the transition for Rackspace was a big and costly bet and the company's stock is down 50 percent over the past year -- though shares jumped 20 percent this morning on the news. It's ironic that the company made the filing just as the semi-annual OpenStack Summit in Atlanta took place this week.
Rackspace also has a formidable SharePoint and Exchange hosting service. I can't help but ponder Microsoft being one of those interested parties, as outlandish as that may sound to some. There's good reason to laugh off Microsoft having any interest in Rackspace. The Microsoft Azure cloud service already has 12 global datacenters online with four more in the queue for this year. Microsoft Azure is part of the Cloud OS, largely based on Windows Server and Hyper-V.
Rackspace, by comparison, runs open source infrastructure. And even though it supports Windows Server and Hyper-V, it's a whole different platform. On the other hand, several people in the OpenStack Foundation have lauded Microsoft for making meaningful contributions and participating in activities. But if Microsoft wanted to have a companion network of datacenters based on OpenStack, Rackspace would be an interesting play.
To be sure, this would be a surprising and likely disruptive move. Coming back from TechEd this week, Microsoft has made clear it's going to put all of its resources into Azure. Unless those inside the company see OpenStack as a viable threat to Azure's future as a dominant enterprise public cloud, buying anything but the company's SharePoint and Exchange hosting service would be a major departure for Microsoft.
There are likely other interested parties. IBM reportedly was once seriously interested in Rackspace before acquiring SoftLayer for $2 billion. Perhaps IBM has renewed its interest in Rackspace, though a counterargument is that Big Blue is emphasizing higher margin services-based offerings. Though I have no insights as to which companies have expressed interest, here are some possibilities, other than IBM:
- Hewlett Packard: Like Rackspace, HP has made a major commitment to OpenStack for both its public and private cloud offerings. The company certainly has the resources to build out its own global footprint since it's a major provider of server, storage and network gear. In other words, it doesn't need Rackspace for its footprint but rather its brand and customer base.
- Cisco: Networking giant Cisco, recently announced its $1 billion "Intercloud" effort. It also is a significant contributor in the OpenStack community and perhaps Rackspace could provide the glue for its InterCloud. This doesn't sound like a move CEO John Chambers would make, as he's trying divest groups that aren't core. Given mixed results with WebEx, another service it acquired, picking up Rackspace may not be a natural fit for Cisco.
- Google; Another unlikely player since it has shown no interest in OpenStack but Google has lots of money to spend and it's made more surprising moves in the past. Also if it had misgivings about passing on OpenStack, this would be an easy way to get on board.
- AT&T: Perhaps the large telecommunications giant wants to follow in Verizon's footsteps (it bought Terremark a few years ago).
- Verizon: Even though Verizon has Terremark, like Google, it hasn't jumped on the OpenStack bandwagon.
- VMware/EMC: VMware has not totally given OpenStack a pass (having bought Nicera), but the VMware Hybrid Cloud service is targeting shops with its private virtualization infrastructure.
- Red Hat: Could the open source software company, which claims to be the largest OpenStack contributor, decide to become a service provider too?
- Other possibilities: One can't rule out some other companies with deep pockets (or access to capital) such as SAP, Salesforce.com, Dell and Oracle. But I'd say these are all likely longshots.
To be sure, Rackspace said in its filing that it could also go the partnership route or other alternatives. Rackspace has given no timetable for making any type of move, indicating it was just exploring its options. That said, we all know how these things usually work out.
16-05-2014, 15:29 #7
16-05-2014, 19:00 #8
- Data de Ingresso
- Oct 2010
- Rio de Janeiro
16-05-2014, 19:58 #9
Na época que começou a circular o rumor da IBM comprar a Softlayer eu cometi 3 grandes erros de avaliação. O primeiro, é que eu acreditava que a IBM não tinha necessidade de incorporar os data centers da SL, que inclusive eram dotados de equipamentos não IBM, porque a IBM tinha experiência e tecnologia (de sobra) e, o mais importante, atendia clientela corporativa e não Bolsa Familia. A razão que poderia fazer sentido seria atrasar a expansão de competidores como EMC/VMware ou Cisco. O segundo equivoco foi interpretar que o Lance Crosby estava minimizando a importância de VMs antes de encontrar comprador porque a SL era inexpressiva no negócio de virtualização e não tinha tecnologia para competir com a sofisticação da Amazon, Microsoft, Google. O terceiro erro foi embarcar na cantilena da imprensa que essas 3 empresas disputam o mesmo tipo de cliente/utilização, o que está longe de ser verdade.
Depois da IBM ter comprado a SL ficou claro que Crosby não minimizava VMs porque a SL não era player mas sim porque VMs não fazem sentido no segmento de mercado que a SL e a IBM pretendem dominar. Tenho dúvidas se o Crosby atualmente considera a Rackspace um competidor.
19-05-2014, 11:31 #10
With Rackspace In Play, Cloud Hopefuls Gather, Room for One More?...
But could there be a case for someone from the service provider world making a move? While I can’t really see any of the US or European operators doing such a thing, there is one foreign operator with big cloud plans for whom there might be a fit.
I’m thinking of the Japanese giant NTT, for whom the Rackspace public/hybrid cloud infrastructure might be an interesting fit. Last fall they bought Ragingwire and Virtela in the US market, and they’ve assembled a pretty broad suite of global cloud assets and capabilities over the past several years. What they don’t have is a big, public presence in the public cloud to give the rest of their offerings an automatic boost in name recognition. Like Cisco, HP, and Dell they easily have the resources to keep Rackspace in the game, and they have a longer track record in this side of the business.
It’s just a thought, as I have heard nothing of the sort outside my own imagination. As a bit of fair disclosure, Telecom Ramblings is hosted on a Rackspace cloud server.