Rackspace Hosting 1Q net income up on higher sales

SAN ANTONIO (AP) -- Cloud computing company Rackspace Hosting Inc. said its first-quarter profit rose from last year on higher sales, but the profits just met Wall Street expectations and costs were higher.

Shares fell 13 percent in after-hours trading.

Rackspace Hosting said its costs jumped 28 percent in the quarter to $264.3 million, compared to $206 million the year before. The higher spending was driven by marketing and administrative costs.

The company, which provides remote, or "cloud" based, computing services to clients, said that during the quarter ended March 31, it earned net income of $23.2 million, or 17 cents per share, compared to $13.8 million, or 10 cents per share, in the prior-year period.

That's in line with the 17 cents per share analysts expected, according to FactSet.

Revenue rose to $301.4 million from $230 million in the prior year period. Analysts were expecting $300.2 million, according to FactSet.

The company said that its number of servers and customers rose from the end of last year. Its server count increased 3 percent from the fourth quarter of last year to 82,438. The number of customers rose 5 percent to 180,866 in that time.

But the company must still compete to keep customers in a rapidly changing industry, CEO Lanham Napier said in a statement.

"While we've made a lot of progress so far in 2012, we have much more to do," Napier said.

Shares fell $7.44, or 13 percent, to $50.36 in after-hours trading. The stock had already dropped 60 cents to close at $57.80 in regular trading. The stock has traded between $30.34 and $60.55 over the last year.

More here:
Rackspace Hosting 1Q net income up on higher sales

Related Posts

Comments are closed.