Rackspace raises buyback to up to $1 billion

Reuters News
Posted: Aug 10, 2015 4:11 PM

(Reuters) - Web hosting company Rackspace Hosting Inc reported a 11 percent rise in quarterly revenue and raised its share buyback program to up to $1 billion, sending its shares up 5.4 percent in extended trading on Monday.

The company said the buyback is in addition to the $200 million it had already bought back. The company announced a $500 million buyback program in November.

Rackspace, which leases online storage space to companies and provides its clients management and support services, also said it expects third-quarter revenue to rise 2 percent to 3.5 percent on a constant currency basis.

The company is facing tough price competition from Amazon.com Inc, Google Inc and Microsoft Corp for cloud services that includes online storage, processing power and database services.

Net income rose to $29.2 million, or 20 cents per share, in the second quarter ended June 30, from $22.5 million, or 16 cents per share, a year earlier.

Revenue rose 10.9 percent to $489.4 million.

Analysts on average had expected a profit of 20 cents per share on revenue of $490.5 million, according to Thomson Reuters I/B/E/s.

Up to Monday's close, stock had fallen 32.2 percent this year.

(Reporting by Kshitiz Goliya in Bengaluru; Editing by Don Sebastian)