Rackspace Names Taylor Rhodes CEO; Stock Down

(RTTNews) - Cloud service provider Rackspace (RAX) Tuesday named Taylor Rhodes as its chief executive officer and a member of the board, effective immediately. Rackspace co-founder, Graham Weston, who has served as CEO and chairman since February, now is non-executive chairman of the board.

Rhodes is a Rackspace veteran who has served in a variety of leadership positions within the company since 2007. He retains his previous role as president and remains responsible for the company's operations worldwide.

"Our board conducted a thorough search of highly qualified internal and external candidates, and we are confident that Taylor is the right person to lead Rackspace through its next phase of growth," said Sam Gilliland, lead independent director of the Rackspace board.

Rhodes joined Rackspace in 2007 to lead the business unit responsible for delivering Fanatical Support to more than 1,000 of the company's largest and most complex customers. Previously, Rhodes served as president since February. Prior to that, he was senior vice president and chief customer officer responsible for Rackspace's global sales and Fanatical Support organizations.

Before joining Rackspace, Rhodes worked at EDS in a series of progressively more challenging leadership roles, managing end-to-end relationships with large global customers.

The leadership changes comes as investors are concerned about competition from companies that are creating their own cloud services, even as Rackspace has managed to boost its revenue.

Last month, investment firm Blue Harbour Holdings LLC disclosed a 6.4 percent stake in Rackspace. Blue Harbour said the investment represented an attractive opportunity and that it would engage in talks with Rackspace and potential strategic partners over the company's business, management, capital structure, board composition and strategic alternatives.

In July, Rackspace was reported to be in talks with a private equity firm to go private. The company earlier hired Morgan Stanley to explore strategic options and was approached for partnership and acquisitions.

Rackspace stock closed Tuesday at $39.34, up $0.34 or 0.87%, on a volume of 4.2 million shares on the NYSE. In after hours, the stock dropped $7.21 or 18.33% at $32.13.