Rackspace results fall short of expectations

Cloud-computing company Rackspace reports 1Q profit rose but not enough to satisfy Wall Street

Associated Press

SAN ANTONIO (AP) -- Rackspace Hosting Inc. said Wednesday that its first-quarter profit rose, but the results fell short of Wall Street expectations. Its stock dropped 17 percent after-hours trading.

"We got off to a slow start for the year," Chief Financial Officer Karl Pichler said in a statement, adding that "our immediate focus is on restoring our growth trajectory."

The San Antonio cloud-computing company manages systems for businesses.

Net income was $27.3 million, or 19 cents per share, compared with $23.2 million, or 17 cents per share, a year earlier.

But profit dropped 9 percent from the previous quarter and fell short of analysts' expectations — they were looking for 20 cents per share, according to a FactSet survey.

Revenue rose 20 percent to $362.2 million but also landed short of the analysts' forecast of $366.6 million.

During the quarter, the company boosted the number of servers it operates by 4 percent from the previous quarter to about 94,000 but saw virtually no change in revenue per server.

After the first-quarter numbers were released, Rackspace's shares fell $8.76 to $43.48. They had ended the regular trading session up $2.52, or 5 percent, at $52.24.

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