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RackSpace IPO Filing Hints at Expansion Plans

Data center and hosting provider RackSpace Inc., has filed to raise up to $400 million in an initial public offering. Its financials seem generally sound (unlike many tech companies it’s actually profitable), although profits did drop by 10 percent in the last year.

However, rapid expansion (including its investment in the cloud) are to blame for the decline in profits. The company made $362 million last year and more details can be gleaned from its S-1 filing with the Securities and Exchange Commission. Some tidbits of interest include RackSpace spending $7.3 million in power used to operate 36,692 servers in 2007.

In the coming year, the company anticipates expanding its data center facilities by a least 72,000 square feet, and may also opt to find a new data center location outside of its existing facilities. It also plans to launch a platform product for customers who want hosted infrastructure but also have the need and skills to customize the hosted infrastructure to a high degree.

The San Antonio company follows in the footsteps of Google and NetSuite with its auction-style offering. Should the offering go well investors Sequoia Capital and Norwest Venture Partners stand to gain. The two firms hold 11.6 percent and 16.2 percent of RackSpace stock respectively.

9 Responses to “RackSpace IPO Filing Hints at Expansion Plans”

  1. 400 million is about what I paid for my services at rackspace when I hosted my servers their. Nickel and Dime me everytime I need support. Moved over to server intellect where I can get some support without paying 400 million per incident.

  2. Expansion into new services seems like a natural progression for a profitable and well managed company like Rackspace. By new services, I mean offerings such as email backup, billing, metering of use etc. In the long term services could also include managing helpdesk and Level 1 support like a telecom service provider does today.

  3. Hmm it doesn’t really make sense for RackSpace to be expanding right now as the market is going to start contracting unless they see something that the rest of us don’t.

    We are barely in a recession and I think we are going to see much more hard times ahead which will make the American consumer spend less which in turn gives companies low profits. Now this can be either good or bad for RackSpace, SAVVIS, Navisite, Internap, etc. Either companies will spend less or start outsourcing their IT to these companies more to reduce costs.

    This market hasn’t been kind to hosting stocks just go look at LLNW, SVVS, INAP, NAVI. We’ll see how RackSpace does.