Blog Post

Rackspace: No hurry to hire a new CEO

Despite the tumble Rackspace(s rax) shares took after the announcement of the surprise retirement of its CEO, the company feels no pressure to find a new long-term CEO, according to that outgoing CEO Lanham Napier. (Rackspace shares fell 11.55 percent in after-hours trading Monday, to $35.70 from the closing price of $40.36.)

“With Taylor and Graham here, there’s not a lot of risk,” Napier said in an interview Monday night after Rackspace’s fourth quarter earnings call. He was referring to Rackspace’s newly installed president, Taylor Rhodes, and chairman Graham Weston, who is stepping in as interim CEO.

Rackspace CEO Lanham Napier.
Rackspace CEO Lanham Napier.

The optics are tricky here. Napier has spent fourteen years at the San Antonio, Texas-based company but is just 43 years old. “I see this as retirement from Rackspace, not retirement from life…I pulled the wagon as far as I can for as long as I can,” he said. He plans to take a break and then will likely get involved in educating “first-generation Americans” before going on to build something else.

Skeptics say this is a bad time for change at the top as webscale public cloud warriors Microsoft(s msft), Amazon(s amzn) Web Services and Google(s goog) trade cloud price cuts in what looks to be a race to the bottom. Any way you slice it, all those companies have resources that eclipse those of Rackspace.

But Rackspace, like HP(s hpq), IBM(s ibm) and others, says the value lies in providing a mix of public, private and hybrid clouds — which it says it is uniquely suited to provide.

The company’s OpenStack private cloud is a “market expander,” Rhodes said on the same call. “Before we had this, customers had to come into our data centers and buy into our model. Now CIOs who want to become more like service providers themselves, and who typically run VMware(s vmw) or Microsoft(s msft) stacks internally, want an open alternative to that stuff. This gets us into a new spot with interoperability between our multitenant public cloud and private cloud.”

That may be, but even Rhodes acknowledged that that interoperability isn’t all set yet and Rackspace is not hurting for competitors attacking the hybrid cloud market — including VMware and Microsoft.

Still, as I have to keep reminding myself, we are very early into the cloud computing era. If Rackspace can weather the cutthroat competition by getting business customers to pay a premium for its “Fanatical Support” clouds, it could ride out what looks to be a very rough sea.