Ruh-roh. Rackspace brings Morgan Stanley aboard to evaluate its options

Rackspace President Taylor Rhodes

As Amazon, Google and Microsoft traded cloud price cuts in the past few months, you really had to wonder how Rackspace, with its high-touch (and pricier) service model, could compete. All of those companies dwarf Rackspace in size and resources. Now it’s clear Rackspace is wondering too and has hired Morgan Stanley to help chart its course.

The news, which comes just days after the San Antonio, Texas company reported better-than-expected first quarter earnings, was outlined in an 8K filing with the SEC on Thursday and first reported by Bloomberg News.

In an e-mailed statement, a Rackspace spokesman said:

“Our board decided to hire Morgan Stanley to evaluate the inbound strategic proposals, and to explore any other alternatives which could advance Rackspace’s long-term strategy. No decision has been made and there can be no assurance that the Board’s review process will result in any partnership or transaction being entered into or consummated. The company has not set a timetable for completion of this process and does not intend to discuss or disclose further developments with respect to this process unless and until the Board approves a specific partnership or transaction.

There’s been a series of management changes at the top as of late. Taylor Rhodes (pictured above) was named president in January, filling a slot that had been empty since Lew Moorman left for family reasons last summer. Former CEO Lanham Napier retired in February. So we’ll have to stay tuned and ask Rhodes about the company’s plans when he’s on stage at Structure next month.

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