By Tess Stynes
Rackspace Hosting Inc. (RAX) said Lanham Napier is retiring as
the hosted computing provider's chief executive and as a board
member.
The Web infrastructure provider also reported its fourth-quarter
earnings fell 30% as higher costs more than offset revenue
growth.
Shares fell 10% to $36.14 in recent after-hours trading, shortly
after the results were released. Through Monday's close, the stock
has fallen 45% in the past 12 months.
Mr. Napier, who has been with the company for 14 years, will be
succeeded by co-founder, former CEO, and current Chairman Graham
Weston. Mr. Weston was Rackspace's CEO from July 1999 to August
2006.
Mr. Napier will remain as a consultant for several months during
the transition. He plans to invest in and advise other
entrepreneurial companies following a decision to step away from
public company executive leadership.
"With the board and management team aligned around our 2014
strategy and financial plan, I believe now is a natural transition
point to select a new leader for the next exciting phase of
Rackspace's growth," Mr. Napier stated.
"Graham is the right person to step in and lead Rackspace since
he's been with the company from the beginning and served us well
previously as CEO for seven years," Mr. Napier added.
Rackspace's board has also initiated a search process to
identify a long-term successor CEO and retained an executive
recruiting firm to assist in the search.
Since launching a drastically redesigned cloud-computing
platform, the company has struggled to attract new business from
longtime customers. Rackspace has responded by hiring new marketers
and is taking steps to revive its Web-hosting business. The company
also has been beefing up its cloud hardware with more powerful
computers.
Rackspace reported a profit of $21 million, or 14 cents a share,
down from $29.9 million, or 21 cents a share, a year earlier.
Analysts polled by Thomson Reuters expected 14 cents.
Revenue increased 16% to $408 million, at the high end of the
company's expectations for $400 million to $408 million.
Write to Tess Stynes at tess.stynes@wsj.com
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