Rackspace Chairman Graham Weston has bought $2.5 million worth of the cloud and managed services company’s stock, saying the move illustrated his assurance in the company’s success.
“My willingness to invest in Rackspace expresses my belief in the company's future,” Weston said in a statement. “I believe we can be the trusted partner to the rising wave of businesses who need help managing their cloud.”
Weston, one of the company’s founders, held 13.2 percent of outstanding Rackspace stock prior to the purchase, closed Tuesday. He bought the additional stock on the open market at about $43 per share on average – a total of 58,480 shares.
The price was close to the high end of the stock’s range that day, which was also the worst day for the company’s stock this week. Rackspace stock value continued going up Wednesday and Thursday.
Weston also filed a plan to spend another $2.5 million on the company’s stock over the next year, “as part of his individual investment strategy,” according to a company statement.
The company made the announcement after markets closed on Thursday, and its stock was up 1.2 points (2.71 percent) in afterhours trading.
It reported solid third-quarter results earlier this month. Sales were up 18 percent year over year (Q3 revenue was $460 million), and earnings per share were $0.18 – up from $0.11 reported for the third quarter of 2013.
Windcrest, Texas-based Rackspace started as a hosting company and gradually changed its focus on being an Infrastructure-as-a-Service cloud provider. As more and more companies joined the IaaS market, including giants Microsoft and Google, Rackspace shifted focus once again, blending its reputation for “fanatical support” with cloud services, billing itself as a “managed cloud” provider. It is now going after customers who want cloud but who also need a lot of assistance in managing their cloud infrastructure and applications.
Rackspace has always stood out among cloud and hosting providers by being extremely hands-on with its customers and by loudly advertising its focus on support. It has also been at the forefront of several important technological advancements in cloud in recent years.
The company was heavily involved in the creation of OpenStack, the open source cloud architecture that is now enjoying widespread industry support and deployment. Rackspace was the first to build a commercial public cloud service using OpenStack.
The company was also one of the early adopters of hardware built using open source specs developed by Facebook for its own use and released into the public domain through the Open Compute Project. Rackspace’s OpenStack cloud runs on customized Open Compute servers.