CenturyLink Weighing Options Regarding Rackspace Buy Out

Unable to compete with top tier IaaS providers, Rackspace has pivoted its business model from one that offers cloud at competitive prices to a cloud service provider that includes access to experts to help you out along the way. Top shelf IT organizations such as HP and IBM have said to have been interested in buying Rackspace. However, sources such as Bloomberg are reporting that CenturyLink could be ready to open its war chest and shell out several billion to buy out Rackspace.

CenturyLink is looking to break into the top tier of IaaS providers. Analysts feel as if the buyout will help CenturyLink directly compete against the likes of Amazon, Microsoft and Google. CenturyLink’s presence in telecommunications gives it an upper hand when selling cloud services because of the ability to bundle deals together while providing the client with only one vendor to work with.

Not much is being said from either camp in regards to the acquisition. Bloomberg reached out to Christina Weaver, a PR representative for Rackspace. Weaver refused to provide an interview with Bloomberg citing a corporate policy that prevents her from giving interviews on this topic. Bloomberg also attempted to reach out to Kelly Sullivan, a PR representative for CenturyLink. Sullivan also refused to comment on the deal.

It should be noted that while other cloud companies have been steadily rising, Rackspace’s stock quote has been going in the other direction. The company has invested significant amounts of capital into data center hardware however Rackspace refused to participate in the cloud pricing wars where the big three vendors repetitively slashed their prices on cloud services. Many organizations reported that they left Rackspace in order to enjoy the cheaper prices offered by other IaaS. Many analysts feel that CenturyLink is the right owner for Rackspace. Experts mention that if this deal goes through, formal announcements could be made as soon as next week.

CloudWedge