August 9, 2008 – (HOSTSEARCH.COM) – San Antonio-based web host Rackspace has launched its Initial Public Offering (IPO), it was announced Thursday. According to reports, the launch was within what most analysts estimated as being the price range - $12.50 per share compared to the forecasted $12-$16. The IPO was the first from an IT company in 6 months and the first backed by venture capital in the second half of 2008. The company sold 15 million shares raising $187.5 million in what is known as a “Dutch auction”.
Rackspace was supported by capital firms Norwest Venture Partners and Sequoia Capital in the IPO. This is the company’s second IPO attempt, its earlier bid withdrawn due to reduced interest in IT stocks in the market. 12 IT IPOs have been withdrawn to date in 2008.
The success of the venture was despite caution from a number of quarters. CNNMoney’s August 6, 2008 online edition suggested, ”Rackspace’s game is hosting, which basically means its computers manage other companies’ internal and external Internet presence. This can be anything as basic as handling e-mail, or as complicated as serving up an internal sales tracking system. It’s no easy business – hosting companies need lots of powerful servers to put their customers online, buildings to hold the servers, and cash to pay the outrageous power bills. Even tech darling Apple had some trouble with hosting; its new MobileMe service, designed to manage e-mail, calendars and other functions, belly-flopped on its debut, losing customer e-mails and intermittently going on the fritz”. The article did though go on to suggest, “From what I’m told, the cutting-edge companies that offer their services on top of Rackspace’s system respect the way they run their business”.
