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