Rackspace CEO Steps Down, RAX Stock Tumbles

by Burke Speaker | February 11, 2014 9:13 am

Rackspace CEO Steps Down, RAX Stock Tumbles

Rackspace (RAX[1]) RAX stock is seeing a drop after Rackspace CEO Lanham Napier stepped down following a disappointing year for its stock.

RACKSPACE185 Rackspace CEO Steps Down, RAX Stock Tumbles[2]

RAX stock is down 12% pre-market on the news.

Rackspace is replacing Napier with co-founder and Chairman Graham Weston, 49, as its interim head while it searches for a permanent replacement.

The move was expected, as Rackspace faced a challenging 2013. Rackspace reported a profit of $21 million, down from $29.9 million a year earlier.

Via the Wall Street Journal:[3]

News of the change at the top came as Rackspace said higher costs drove its fourth-quarter profit down 30%, sending shares down 10% to $36.14 in recent after-hours trading. Through Monday’s close, the stock had fallen 45% in the past 12 months.

Rackspace’s stock tumbled last year after the company’s gamble on newer cloud computing technology backfired, pulling attention and marketing away from its slowing but still-lucrative hosting service.

At its heart, the company’s cloud computing business is the point of contention.

Rackspace still lags behind industry leader Amazon (AMZN[4]), which rents more computing to the world than its 14 largest competitors combined.

This year, the company is also forecasting lower-than-expected revenue.

Weston was Rackspace’s CEO from 1999 to  2006.

Endnotes:
  1. RAX: http://studio-5.financialcontent.com/investplace/quote?Symbol=RAX
  2. [Image]: http://investorplace.com/wp-content/uploads/2013/09/RACKSPACE185.jpg
  3. Via the Wall Street Journal:: http://online.wsj.com/news/articles/SB10001424052702303650204579375323913117020?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303650204579375323913117020.html
  4. AMZN: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMZN

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