February 27, 2010(WEB HOST INDUSTRY REVIEW) Web hosting company Rackspace Hosting (www.rackspace.com) closed at 19.78 (-0.14) a share Friday on the New York Stock Exchange. It has been going down bit by bit for the past two days, although last Wednesday, February 24, saw its stock go as high as 20.41 a share.
However, that is not entirely bad news since Rackspace’s announcement last week of its fourth quarter earnings for 2009 exceeded market expectations. The net revenue was $169.5 million, up by 4.4% from the previous quarter and 18.4% increase in earnings from the fourth quarter of 2008. The last quarter (2009) earnings did follow up strongly on its earnings for the third quarter last year, where the hosting company raked in a revenue of $147.1 million.
The hosting provider earned $9.0 million last year, or 7 cents a share, compared to the $6.8 million, or 6 cents a share, it earned in 2008.
Rackspace Hosting attributes the high earnings to revenue growth mainly on both its managed hosting business and cloud hosting business. Bruce Knooihuizen, chief financial officer commented, “We are pleased with the business performance in 2009. Amid the toughest economy in 70 years, we delivered on all the promises that we outlined last February. As we think about 2010 and beyond, we’re excited about the opportunities in our managed hosting and cloud businesses. We have made significant investments over the past year – we bolstered our management team, developed an enterprise offering and transformed the cloud. These investments and others have earned us the number one spot in the managed hosting and cloud computing industry, positioning us well for next cycle of growth.”
For cloud revenue in the last quarter alone, it saw an increase of 12% with $17.1 million, up from $15.3 million in the third quarter of 2009. Cloud net revenue was $56.4 million for whole year of 2009, an 124.8% increase relative to 2008.
On the other hand, the company’s managed hosting revenue for the fourth quarter of 2009 increased to $152.4 million, up from $147.1 million in the third quarter of 2009, or a 4% rise.
For this whole year, 2010, Rackspace Hosting expects its total capital expenditures will be between $185 million to $235 million. This would include $10 million to $20 million for data centers and office space each, $140 million to $160 million for customer gear, and $25 million to $35 million for capitalized software.