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The death of Rackspace’s ‘fanatical support’

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Re: The death of Rackspace’s ‘fanatical support’

#21

Post by koolba »

ferdek wrote: post #11
pcurve wrote: post #2

Apollo is the private equity giant that bought the company in 2016 in a $4.3 billion deal. The latest market cap is less than $800 million on sale of more than $3 billion / year. Still losing money.

Officially , Rackspace is ~30% sold short. Someone is already making tax-free billions shorting it to death.

Why would it be tax free? Until the position is closed out it'd be an unrealized gain but there's nothing special about shorting. Gains are not taxed until they're actually realized by closing out the position.

Re: The death of Rackspace’s ‘fanatical support’

#22

Post by popcorncowboy »

ferdek wrote: post #11
pcurve wrote: post #2

Apollo is the private equity giant that bought the company in 2016 in a $4.3 billion deal. The latest market cap is less than $800 million on sale of more than $3 billion / year. Still losing money.

Officially , Rackspace is ~30% sold short. Someone is already making tax-free billions shorting it to death.

Not that I'm saying Apollo's strategy was to pump, dump, short and then crash the company, but if you could generate the trading volume to support the play, you could make money at every point in that trade.

Re: The death of Rackspace’s ‘fanatical support’

#23

Post by shkkmo »

alt227 wrote: post #10
rob74 wrote: post #7

> Don’t expect Rackspace to ever fully recover from Friday’s meltdown. The 1.2 million-square-foot headquarters in Windcrest is now for sale. The remnants of the company will soon decamp to less than 10% of that space, in a smaller office building near Stone Oak. A company stock that soared to about $80 a share in early 2013 fell from about $5 a share Dec. 2, when the meltdown hit the wires, to $3.23 as of Friday’s m…

Rackspace have many divisions and revenue streams, Exchange being a small part of their overall business. They have many thousands of customers still using their other products that are completely unaware of whats going on in Exchange right now. I mean, it didnt even make HN front page! Rackspace will not die from this, they will plod along as a reseller for other clouds for many years to come.

> I mean, it didnt even make HN front page!

There was an article on the frontpage about the outage when it was first happening.

Edit: This is the one I saw on the first page https://news.ycombinator.com/item?id=33839941

Re: The death of Rackspace’s ‘fanatical support’

#24

Post by opsunit »

skilled wrote: post #20

Rackspace had such a strong reputation during the 2000s, particularly for dedicated servers. I wonder if anyone in their exec team ever brought up the fact that they got their ass kicked by DigitalOcean, and similar platforms when it comes to affordable and simple hosting.

They bought and then shuttered Slicehost in an attempt to occupy that market segment.

Re: The death of Rackspace’s ‘fanatical support’

#25

Post by quags »

pigtailgirl wrote: post #16

-- is it true the digital ocean support also bad now?? - who has good support? --

Serious question. What support would digital ocean , an unmanaged vps provider , really need to offer besides keeping their network, control panel and kvm nodes up? Assuming their infra is running normally which is a bare minimum there should be no reason to contact support.

Re: The death of Rackspace’s ‘fanatical support’

#26

Post by SteveNuts »

koolba wrote: post #21
ferdek wrote: post #11

Earlier quoted context omitted.

Officially , Rackspace is ~30% sold short. Someone is already making tax-free billions shorting it to death.

Why would it be tax free? Until the position is closed out it'd be an unrealized gain but there's nothing special about shorting. Gains are not taxed until they're actually realized by closing out the position.

By leaving the position open forever and taking a loan against the security.

Re: The death of Rackspace’s ‘fanatical support’

#27

Post by lordnacho »

pcurve wrote: post #2

Apollo is the private equity giant that bought the company in 2016 in a $4.3 billion deal. The latest market cap is less than $800 million on sale of more than $3 billion / year. Still losing money.

What was the plan? AFAICT they were in a tight spot strategically at the time, and still are. You have AWS as the behemoth, GCP as the pretender, and a whole bunch of other vendors like DO and Hetzner, making things competitive to put it mildly.

Re: The death of Rackspace’s ‘fanatical support’

#28

Post by ferdek »

koolba wrote: post #21
ferdek wrote: post #11

Earlier quoted context omitted.

Officially , Rackspace is ~30% sold short. Someone is already making tax-free billions shorting it to death.

Why would it be tax free? Until the position is closed out it'd be an unrealized gain but there's nothing special about shorting. Gains are not taxed until they're actually realized by closing out the position.

Maybe I misremembered something and cannot find a source now, but I think there was some way to avoid paying tax on short sales when company goes bankrupt and gets delisted.

EDIT: See sibling comment.

EDIT 2: Am I reading this right? almost 1,800,000 shares failed to deliver just in one day of Sep 22nd? [0]

[0] https://fintel.io/ss/us/rxt

Re: The death of Rackspace’s ‘fanatical support’

#29

Post by oxfordmale »

In one of my previous companies we used Rackspace to manage our AWS account. In the early years support was quite brilliant, however, in later years we only kept paying them to keep external investors happy. We could claim that a skilled company was keeping our AWS accounts secure. However, in reality they were useless, and just offered us AWS Well Architected reviews that we could have done in house for a fraction of the costs. In the end it was cheaper to build up an SRE team and pay for AWS Premium Support.

Re: The death of Rackspace’s ‘fanatical support’

#30

Post by acdha »

alt227 wrote: post #10
rob74 wrote: post #7

> Don’t expect Rackspace to ever fully recover from Friday’s meltdown. The 1.2 million-square-foot headquarters in Windcrest is now for sale. The remnants of the company will soon decamp to less than 10% of that space, in a smaller office building near Stone Oak. A company stock that soared to about $80 a share in early 2013 fell from about $5 a share Dec. 2, when the meltdown hit the wires, to $3.23 as of Friday’s m…

Rackspace have many divisions and revenue streams, Exchange being a small part of their overall business. They have many thousands of customers still using their other products that are completely unaware of whats going on in Exchange right now. I mean, it didnt even make HN front page! Rackspace will not die from this, they will plod along as a reseller for other clouds for many years to come.

Rackspace does have other revenue streams, and this will be a wakeup call for their remaining customers because there's no reason to expect that a gross management failure like this will be isolated to one unit.

This did make the HN front page – that's where I learned of it – but it wasn't really a surprise to most of us. This is what private equity does and it's what was predicted back in 2016. I didn't see anyone with high expectations for the deal, but I did hear about several people migrating away as soon as the Apollo news broke.

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