Is Rackspace considering exit options?

RackSpace has recently confirmed that they have retained Morgan Stanley in order to begin entertaining acquisition or partnership requests. As Cloud’s Big Three began their race to the bottom in regards to pricing, it left many industry analysts wondering what would happen to RackSpace once the dust settled.

RackSpace has become an important player in the cloud market. Although the company is a publically traded stock, it seems as if RackSpace just doesn’t have the brand name recognition or the capital to keep up with movers and shakers in the cloud industry. RackSpace has invested $1 billion in infrastructure since 2005. Recently, it was reported that RackSpace had been bleeding clients due to the slashing of cloud prices from vendors such as AWS, Google and Microsoft. While RackSpace’s commitment to cloud and their total investment within the industry is nothing to scoff at, it seems as if the large technology players are exponentially outspending RackSpace.

While the sky may be falling inside of RackSpace’s corporate headquarters, other large tech players who do not have a cloud arm may rush to buy the “Premium” cloud provider. CenturyLink, who is known for making billion dollar acquisitions for its cloud endeavors, could be the premier candidate for buying out RackSpace. AT&T could also be another good fit for RackSpace.

While RackSpace has confirmed that they have retained Morgan Stanley’s services, there is no clear intention to sell the company. In fact, RackSpace may seek out a strategic partner that could help it compete with Cloud’s Big Three.

In a filing, Morgan Stanley and RackSpace noted, “No decision has been made and there can be no assurance that the Board’s review process will result in any partnership or transaction being entered into or consummated. The company has not set a timetable for completion of this process and does not intend to discuss or disclose further developments with respect to this process unless and until the Board approves a specific partnership or transaction.”

RackSpace has recently confirmed that they have retained Morgan Stanley in order to begin entertaining acquisition or partnership requests. As Cloud’s Big Three began their race to the bottom in regards to pricing, it left many industry analysts wondering what would happen to RackSpace once the dust settled.

RackSpace has become an important player in the cloud market. Although the company is a publically traded stock, it seems as if RackSpace just doesn’t have the brand name recognition or the capital to keep up with movers and shakers in the cloud industry. RackSpace has invested $1 billion in infrastructure since 2005. Recently, it was reported that RackSpace had been bleeding clients due to the slashing of cloud prices from vendors such as AWS, Google and Microsoft. While RackSpace’s commitment to cloud and their total investment within the industry is nothing to scoff at, it seems as if the large technology players are exponentially outspending RackSpace.

While the sky may be falling inside of RackSpace’s corporate headquarters, other large tech players who do not have a cloud arm may rush to buy the “Premium” cloud provider. CenturyLink, who is known for making billion dollar acquisitions for its cloud endeavors, could be the premier candidate for buying out RackSpace. AT&T could also be another good fit for RackSpace.

While RackSpace has confirmed that they have retained Morgan Stanley’s services, there is no clear intention to sell the company. In fact, RackSpace may seek out a strategic partner that could help it compete with Cloud’s Big Three.

In a filing, Morgan Stanley and RackSpace noted, “No decision has been made and there can be no assurance that the Board’s review process will result in any partnership or transaction being entered into or consummated. The company has not set a timetable for completion of this process and does not intend to discuss or disclose further developments with respect to this process unless and until the Board approves a specific partnership or transaction.”

Do you think Rackspace may be considering its exit options? Let us know in the comments.

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