Rackspace Hosting Inc. Reports Income Downturn
September 13, 2008 – (HOSTSEARCH.COM) – Rackspace Hosting Inc. has experienced a downturn in income, a number of reports have suggested. Despite revenue of $130.8 million, an increase of 54% on the same period in 2007 and increasing customers by 2,000, the company last week detailed second quarter income of $4.1 million, which is down 14% on the second quarter a year earlier. According to the company, bad business conditions forced the company to spend more on marketing than had been anticipated.
“Just over a month ago, we successfully completed our initial public offering and listing on the New York Stock Exchange,” Chief Executive Officer Lanham Napier was reported as saying in a conference call to investors. However, success is relative and the company’s IPO went against an ongoing trend of reduced IPOs, especially as far as IT businesses are concerned.
After the IPO, Rackspace stock began trading at $12.50 a share, but closed at $9.97 at close of business the following day – a 7% decrease in value. Mr. Napier reportedly recently announced plans to reduce Rackspace expenditure in 2008 by $25 million and postpone building office space valued at $10 million until 2009. Rackspace did though recently open a data center in Hong Kong where the company will establish its Asian headquarters for expansion in the area.
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