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Future For Rackspace Looks Cloudy

Rackspace (RAX) has been an impressive growth story over the last two years as cloud computing has really taken off. Cloud computing is the new thing in information storage, but after Tuesday's earnings report, things are looking less bright for the company.

Rackspace reported cloud revenues were up 57% year over year, which is impressive, but slower than the 69% growth it enjoyed in the second quarter. In addition, the company issued a forecast that came in below analyst estimates for the current quarter.

There are many reasons why this could be happening, but perhaps what we are seeing is people starting to worry about storing so much private information in the cloud. For individuals, it makes sense to use cloud storage for large files such as photos and music, but for companies, privacy issues can be a big concern.

Over the past few years we have seen a lot of high-profile security breaches, and this could be starting to impact companies' decisions about the use of cloud computing to store sensitive information.

If this trend continues, it could be tough for companies such as Google (GOOG) and Amazon (AMZN), which have also been aggressively moving into the cloud space.


Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.