Yeah I don't think it's academic, I think in the real world companies don't alter something as significant as their pricing policies in the midst of an acquisition/merger. The market is bearing out this sentiment. If they report great numbers this quarter and in the future there was probably no need for a merger and the stock will probably move higher. If either they don't report good numbers or they are good in this quarter and weak in the future then they needed a deal but the stock probably goes down. We'll just have to see how it play out. But I also have a financial bet that is also definitely not academic.
This appears to be a strictly academic discussion on your part...reality in the biz world is quite different... the change in pricing model reflects that mgt. is ready and willing to adept to changing market conditions...all said and done we are looking at Aug 11th and a maybe slightly before for an announcement... it is either a merger...even CTL has emerged as a candidate... along with Goog, HP, Pivotal, etc. and of course the qtr. earnings with the outlook being the most important element to seal a deal..this way the acquirer also can validate the acquisition/merger and not get punished by the markets...it is 2 weeks away...technically the gap has been filled... volume is drying up because the wall st scammers are chasing something else to bid up or fry...
Yes that could certainly be. But they would also be dictating the terms of the pricing policy of a company they don't even own according to your logic. And still if that logic held I'd think the stock would be moving higher, which it isn't.
In fact I think this may be the lowest price since they announced their intentions to sell/merge/etc.
A buyer for Rackspace, may not be the common names mentioned. It may be a software based entity where Rackspace offers a new revenue source that enhances their SaaS core business model.
OK I guess you can look at it like that- in which case you believe that this is indicative of an even greater chance that the company is acquired- and is improving their strategic positioning. Assuming we are not looking at a take-under then that news should have been interpreted positively and the stock should have moved up- except that it didn't. Investors, of which I am included, took it negatively. But that's what makes a market. We'll see how it plays out.
Remember that there are a few major variables that are impacting management's thinking and execution of a tactical and strategic plan.
1) Investors and customer perception of Rackspace's value offerings compared to the rest of the sector,
2) The hiring of Morgan Stanley to better identify Rackspace's intrinsic value and suggest paradigm changes,
3) How to increase stockholders value and growth either by a sale of the company, a partnership, or by organically growing the company.
The recent modification of services and pricing is no more than executing management's consensus and Morgan Stanley's input. Think of trying to sell your home (a large asset for many people). One takes the time to fix and spruce up as much as one can before the sale of their home to receive a higher value. This is what Rackspace is doing. Nothing complicated. The service & pricing changes is only what needs to be done for a new buyer or to continue to organically grow the business.
As an investor think linear and only those elements that directly affect creating equity value ( the stock price follows).
They are listening to Morgan Stanley. Their service & pricing action is a great indicator that decision points are being discussed that more than likely were suggested by who ever may buy them .
It's great to be a technology leader and be on the forefront of a secular trend. But you have to adapt when new entrants come to market, some being price leaders. Many a company did not transition elegantly once that happened. If Rax can, that's great- except they said they don't really want to fight the good fight and instead would rather sell/merge.
If I'm buying a company I don't want you changing model in the midst of the acquisition- I don't know how your customers and employees are going to take to it. So the fact that they are doing this suggests to me that buyers are not happy with existing prices, salespeople are not happy selling with existing prices/bundle, and a sale is unlikely.
Just so you don't get confused, GS is working for the buyer....................I'll leave the rest to you. It shouldn't matter if you are long volatility anyway.
Rackspace Revamps Pricing Model. The company announced a new pricing
model to better distinguish itself from large, multi-tenant cloud platforms (i.e.,
AWS). It is now easier to compare Rackspace and its solution to competing
products' pricing. Prices are based on a raw infrastructure component and either
one of two service levels: Managed Infrastructure or the more enhanced Managed
Operations. OPCO: The distinction between what Rackspace provides versus
competing providers hasn't always been obvious, so we think this will help educate
potential customers. Existing customers can choose whether to opt into the new
program or continue with their existing pricing structure. All else equal, we don't
believe the majority of RAX's existing customers would see a lower monthly bill
if they chose the new model. The revenue impact will depend on the evolving
complexity of customers' deployment profile.
If I don't believe in technicals or I don't know what you are referring to does that mean the stock is going up or down? Right now it's filling 31.60