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Rackspace

Company

Information technologies
Since 1998
USA
San Antonio, Texas


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Rackspace — one of the hosting providers providing services in cloud model

Competitors: Amazon, Microsoft

Owners:
Apollo Global Management

Content

Revenue billions

Number of employees
2017 year
6189

Assets

Owners

+ RackSpace

2020: Entry into the Nasdaq exchange

On August 5, 2020 Rackspace returned on the exchange. According to the results of the first day of biddings market capitalization of the company reached $3.3 billion, and it is $1 billion less than that amount which the Apollo investment company paid for purchase of the supplier of cloud services four years before.

The first day of biddings at Rackspace passed unsuccessfully. The share price to the IPO was stated at the level of $21. By the end of day cost fell off for 21%, having reached a point $16.39. The minimum indicator reached a point of $15.69. The company attracted $704 million during initial public offering in the USA, having sold 33.5 million shares.

Entry of the company into the Nasdaq exchange became known in July, 2020. This second IPO in the history of the company. In 2008 entry into the New York Stock Exchange took place, then the company carried the name Rackspace Hosting. Then the company became private, it was purchased by Apollo company for $4.3 billion.

Rackspace came to Nasdaq and was estimated at $3.3 billion

The chief executive of Rackspace Kevin Jones noted that he falling of the price in the first day of biddings is not so important for the company as the command is focused on success of Rackspace in a long-term outlook. Jones paid attention that the stage of an entry into NASDAQ is for the company "the middle of tectonic shift towards multicloud computing" ‎. If to the second IPO Rackspace aimed to compete with the large companies like Google, Microsoft and Amazon Web Services, then now the company improves with them partnership, he noted. Jones is happy how there took place the IPO. He considers that use of innovations in the industry of technologies is the key driver of development of the company and its appreciation.

According to a source, among investors who took shares of Rackspace, BlackRock Inc., Fidelity and Norges Bank Investment Management companies.[1][2]

2016: Sale of Rackspace for $4.3 billion

On August 26, 2016 it was announced sale of Rackspace Hosting for $4.3 billion. The company will become private and hopes that it will allow it to improve business indicators.

The private investment firm Apollo Global Management announced acquisition of Rackspace for $32 counting on one stock of the cloud company that is 38% more than the cost of securities to closing of the exchange on August 3, 2016 — in day when the The Wall Street Journal newspaper wrote about the preparing sale of Rackspace and provoked thereby rise in quotations of the American vendor.

Apollo Global will pay all purchase of Rackspace with own means, is going to close the transaction in the fourth quarter 2016. Under the terms of the agreement, the funds managed by Searchlight Capital Partners (it is based by the former top managers of Apollo Global), invest in joint-stock capital of Rackspace.

Rackspace will become private and hopes that it will allow it to improve business indicators

As notes Bloomberg, Rackspace difficultly to resist to Amazon and Microsoft in the market of cloud services, and in 2016 it began to render to corporate clients of service in transfer of their IT transactions in clouds of these competing IT giant. Having become private company, Rackspace will receive more time and places for completion of transition to new business, experts consider.

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Rackspace gains steam, but very small rates. Having disappeared from the public eyes, it will be able to simplify this transient period — the analyst of Bloomberg Intelligence Joshua Yatskowitz is sure.
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According to the chairman of the board and the cofounder of Rackspace Graham Weston, the transaction with Apollo Global will help the company to become more flexible in business management for long-term growth and to expand a product portfolio.

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Being private company, Rackspace will take the best position to benefit by our early leadership in the fast-growing market of the managed cloud services — Weston said.[3]
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2011: Forecast for cloud computing

In 2011 in Rackspace and other experts made the forecast according to which cloud computing will lead to growth of IT expenses.

Increase in efficiency of use of computer resources will lead not to decrease, and to increase in IT expenses, the analyst of RackSpace company Ben Kepes writes. This idea the thesis of the English scientific 19th century is the cornerstone of William Stanley Jevons who in the work 'A coal question' (The Coal Question) created the following principle: increase in energy efficiency leads not to decrease in energy consumption, and opposite – to the increased total level of energy consumption. The researcher of MIT Andrew McAfee, for the first time paid attention that Jevons principle can be quite applicable also to computer calculations.

'Standard (and correct) the thesis concerning increase in efficiency sounds so: we can make the same with smaller costs, – Andrew Makefi writes. – And standard thinking claims further: we will consume less. But there is also other, not less veracious statement: we will be able to do more with smaller costs. The importance of the great idea of Jeavons also consists in it: we will surely seize this opportunity, and we will begin to do more'.

However increase in level of IT expenses will have actually positive, but not negative, effects for the IT industry, Ben Kepes claims: 'Expenses on the cloud computing (based on fast-scalable model of services on demand) are very closely connected with final business results. If you spend more, then you receive more – and it is good', – the researcher of RackSpace writes.

According to Ben Kepes, the companies should replace the expectations concerning cloud computing: it not means of economy, but means of increase in business performance: 'The main issue for me is not "How many I will be able to save on cloud computing?" and it is rather: "What return from my investments into cloud computing will be?"'

2010: Joint OpenStack project with NASA

In 2010 Rackspace and the space agency NASA announced the new free OpenStack project intended for maintenance of work of infrastructure of cloud-calculations. The code created within an initiative by OpenStack is distributed under the license Apache 2.0. The platform is aimed at creation as the public cloud-services similar to Amazon EC2, and private (local) the cloud-environments completely under control and needs of the company working only for providing.

As premises to creation of the project the absence in the market of the high-scalable open solutions capable to service infrastructure of virtual servers of the big hosting companies similar to Rackspace (100 thousand virtual servers of clients) served. Trying to create the solution, optimal for the tasks, Rackspace company cooperated with the NASA agency which also tried to create means for management of big data sets and thousands of computing nodes. Having integrated already created practices of Rackspace and NASA founded the OpenStack project which was decided to be developed as the free software. The prospects of the new platform were already estimated interested in cloud-calculations and virtualization of firm - such companies as Citrix, AMD, Dell, Cloud.com, NTT Data, Intel and also a set of the small firms specializing in cloud-calculations already joined an initiative.

According to the statement of founders of OpenStack, the project will be completely open, there will be no expanded proprietary versions and commercial licenses, all functionality will be available and open, all code will be available in repositories at any stage of its integration into the project. Solutions on development and architecture of OpenStack will be accepted is transparent and with involvement of community of developers - for project management the independent management board will be created. OpenStack profitable differs in the openness from the closest competitor - the Eucalyptus project at which two essential shortcomings are noted: limited scalability (the NASA agency ceased to use Eucalyptus because of problems with deployment of a large number of servers in due time) and closeness of a part of code base (the open community-version is significantly cut down by opportunities, enterprise-edition is a proprietary product).

Within the project it was going to develop two products:

  • Completely distributed, failsafe and highly reliable storage of objects OpenStack Object Storage based on the code of the service developed in a subsoil of Rackspace company for the organization of storage of files in network. The stored objects remain at the same time on several nodes of a cluster in data center, at the same time automatic control of integrity and replication at shutdown/adding of nodes is provided. The storage is scaled horizontally, i.e. for increase in the size it is rather simple to add new nodes which configuration is made automatically. At a node exit out of operation, its contents are reproduced on other nodes of network for ensuring due redundancy. Duplication of information allows to use typical inexpensive servers for formation of a cluster, without caring for reliability of each of them separately.
  • The OpenStack Compute tools for centralized operation by a server group, ensuring work of scalable computing cloud-network and the virtual environments working in it. OpenStack Compute allows to create and manage work of big groups of VPS servers automatically. A system is based on the NASA Nebula technology and practices applied to rendering service of Rackspace Cloud Servers. OpenStack Compute is written in the Python language using frameworks of Tornado and Twisted, for message exchange the AMQP protocol is used, Redis DB is used for data storage.

Notes

  1. Rackspace shares tumble of 20% on first day of trading after IPO Apollo-Backed Rackspace Dives in Debut After
  2. of $704 Million IPO
  3. Apollo Agrees to Buy Cloud Seller Rackspace for of $4.3 Billion

Stock price dynamics

Ticker company on the exchange: NASDAQ:RXT