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Rackspace shifts concentration to hybrid cloud as CEO departs

Rackspace will focus on hybrid cloud services in the future after the departure of CEO Lanham Napier set in motion a chain of events that will change the company’s course.

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The announcement, made during a conference call with analysts, was a “difficult” one for Napier and he will stay as a consultant to guide the company into its next phase with Rackspace co-founder and former CEO Graham Weston taking on the CEO gig on an interim basis.

“The truth is there’s no perfect time for a transition like this one. But I believe now is as good a time as any, and there are a number of reasons why,” Napier stated.

Napier has been pivotal in helping the firm to grow from its humble beginnings as a “tiny startup” to a “global leader in cloud computing” and Weston thanked Napier in this regard.

When it comes to the hybrid and private cloud communities, Napier praised the company’s open source cloud platform OpenStack and the success it has had in this sector.

“Our OpenStack public cloud now is competitive for workloads of any size, while our Openstack private cloud is winning accelerated adoption from some of the world’s biggest enterprises,” he stated. “The transition has been challenging and has taken longer than we anticipated, but our ambitions for this game-changing transition are massive. I wanted to stay at the company long enough to see the transition through, and I feel like we're finally over the hump.”

The announcement sent shares crashing by around 13 per cent in extended trading and it came after its Q4 2013 results saw a 15.6 per cent rise in net revenue to $408 million whilst net income dropped by 30 per cent to $20.8 million.

Weston, meanwhile, plans to focus on the company’s hybrid cloud in the hope that the firm will continue to be one of the leaders in the industry.

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"We'll continue to build our capability in the software, build more software that helps our hybrid cloud operate better ... we're going to continue to run more and more private clouds for companies on-premise,” Weston added. “I plan to aggressively push Rackspace into our future as one of the clear leaders in the emerging cloud market, an opportunity I view as one of the biggest in the history of business.”