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Turnaround Expected in Rackspace Hosting

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Overview

In this series, we’ll analyze the performances of Rackspace (RAX), VMware, and Teradata (TDC) in The First Trust ISE Cloud Computing Index ETF (SKYY).

Since January 2015, SKYY generated returns of 5.2% to close at $29.61 on October 14, 2015. In comparison, the PowerShares QQQ Trust Series 1 ETF (QQQ) has generated year-to-date (or YTD) returns of 4.2%.

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Subsector performance

In the above chart, we can see that the Internet Software and Services subsector generated returns of -2.4%, whereas the Specialized REIT and the Systems Software subsectors generated returns of -1.5% and -1.4%, respectively, in the trailing-one-month period.

Subsectors that have outperformed SKYY include Communications Equipment, Technology Hardware and Storage, and Internet Retail, with returns of 10.1%, 4.8%, and 7.7%, respectively.

Polycom (PLCM) has generated trailing-one-month returns of 22.2%, whereas Juniper (JNPR) has generated returns of 14.5%. In comparison, Rackspace, VMware, and Teradata generated negative returns of -15.9%, -15.4%, and -4.7%, respectively, in the trailing-one-month period.

Rackspace partners with Intel in the OpenStack space

Taylor Rhodes, President and CEO (chief executive officer) of Rackspace, stated, “During the second quarter, we made progress on several key fronts, including with our 50 largest enterprise customers, whose spending with us is growing at more than twice the rate of our overall business.”

Rhodes also said, “We expanded our managed cloud strategy by providing our expertise and Fanatical Support on Microsoft (MSFT) Azure. We’ve launched a major partnership with Intel (INTC) to make OpenStack public, private and hybrid clouds easier to deploy, more scalable and more secure. And we continue to make progress toward building the market-leading managed services offer for customers on the AWS cloud.”

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