Rackspace: Bull and Bear Cases Revisited

Forbes.com (Jan 10 2012) Cloud Computing

1. Following my Rackspace: Bull and Bear Cases article, I had the opportunity to speak with Bryan McGrath, Director of Finance, at Rackspace to discuss the bear case, capital efficiencies, customer base and competition. Herein are the takeaways from that discussion. If there is one thing Rackspace management wants to avoid, it’s “stranded capital.” Management adheres to a strict EVA (Economic Value Added) metric, or generating a return on capital invested that exceeds their cost of capital. Historically, Rackspace return on capital has run in the 30%s although, since the purchase of their new corporate headquarters, the fully-burdened return on capital has been increasing from 9% in 2009 to 14% year to date. (Read Full Article)

   Bookmark or Share this article

Login to comment.