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EarthLink Holdings Corp. Message Board

  • accugrowth accugrowth Aug 12, 2013 9:34 PM Flag

    Compare ENLK to RAX

    On the last conference call, the ELNK CEO was envious of Rackspace and indicated that they compete in the same space. RAX released their Q2 report last week. Their Revenue figures were just a little higher than ELNKs. The cash generated was similar. However, RAX carries much less debt.

    The RAX Enterprise Value is several times higher than ELNKs. Investors chased after RAX and are showing distain for ELNK since the Q2 reports. Even though ELNK has finished with the costs of building out their Data Centers, RAX announced that they need to put more money into their network. It seems to be that ELNK is in the better position to grow from here; while RAX needs to find money to pay for growth.

    ELNK is in a much better competitive position than RAX going forward. They may even make good merger partners.

    I am expecting ELNK to announce more information about its Mobile Cloud abilities in tomorrow's presentation. I suggest investing in future prospects, rather than only evaluating a company by their past.


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    • Same as comparing iPhone to Nokia. You need to listen to mccormickred. You think RAX needs money. Wait until you see the cash burn associated with three data centers running at 10% occupancy. It is catastrophic. It's the same as a hotel running at 10% occupancy.

      • 1 Reply to mccormickred
      • OK McRed, I agree with you that the ELNK revenue projections for Q3 and Q4 2013 are not that exciting. However, all of 2014 looks good for the top line and the bottom line.

        RAX is saying that there is plenty of demand out there for cloud services. You can make the assumption that ELNK will not be able to fill their Data Centers. However, it does not seem to be a healthy investment thesis. Since ELNK has already paid for the build out, full Data Centers means growth and profit. IMHO

        RAX has 6 times the Enterprise Value of ELNK with only a small difference in Revenue. RAX needs to invest to build more Data Centers. ELNK just finished their build out.

        Enterprise Value
        ELNK = 1.03B with 600M in debt
        RAX = 6.43B with 88M in debt

        ELNK = 1.25B twelve months 2013
        RAX = 1.43B twelve months 2013

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