Needham & Company Maintains 'Hold' Rating on Rackspace (RAX) Amid Merger; Still Sees Business Ramp Taking Years
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Needham & Company affirms Rackspace Hosting (NYSE: RAX) at Hold following news that Apollo Group would acquire the company for $32 per share.
The firm commented,
When the history is finally written on RAX as a public company we suspect it will largely read as a well-executed marketing spin on a traditional hosting business; a company that was unable to fully capitalize on the cloud mega-trend it successfully framed for customers due to scale disadvantages. In response the company has wisely pivoted to leveraging their strongest asset (their people) to help migrate/manage workloads on competing clouds. Unfortunately, bringing this new business to critical mass will take years, in our view, which is why we believe the right decision for shareholders is to undergo this metamorphosis as a private company.
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