Rackspace CEO Napier to retire; Q4 solid

Rackspace named co-founder Graham Weston CEO. The company's fourth quarter report looked solid.

Rackspace CEO Lanham Napier said he will retire as the company delivered fourth quarter earnings that were in line with expectations.

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The company named co-founder Graham Weston CEO. He was executive chairman. Napier said he will step away to invest in companies and remain a consultant to Rackspace for a smooth transition.

Taylor Rhodes, chief customer officer, will be president of the company.

Rackspace said it reported fourth quarter earnings of $20.8 million, or 14 cents a share, on revenue of $408 million, up 16 percent from a year ago. Wall Street was looking for earnings of 14 cents a share in the fourth quarter on revenue of $404 million.

Napier's departure comes as Rackspace is competing with Amazon Web Services and growing to become more of a cloud provider instead of a hosting company. On a conference call, Napier said:

Let me take a few moments to explain the thinking behind my decision and how to think about what comes next. First, I want you to know that my decision was a difficult one. It required much soul searching and a thoughtful process with the Board and I'm confident that it's the right choice. The truth is there's no perfect time for a transition like this one but I believe now is as good a time as any and there are number of reasons why. Beginning with the launch of OpenStack, which is now the dephak toe standard for open source cloud software, we embarked on the largest transition in our history. I am pleased with the progress we have made, the increased capability of our hybrid cloud offering, and the way that it qualifies us to compete for much larger opportunities. Our OpenStack public cloud now is competitive for workloads of any size while. From some of the world's biggest enterprises. The transition has been challenging and has taken longer than we anticipated. But our ambitions for this game changing transition are massive.

Weston said:

I plan to aggressively push Rackspace into our future, as one of the clear leaders in the emerging cloud market. An opportunity that I view as one of the biggest in the history of business...I'm confident that we can make 2014 one of the best years of Rackspace's history. We will adapt our strategy to take advantage of opportunities as they arrive during the year. But we are quite clear on you how we will win. We will establish ourselves as the leading service specialist in the hybrid cloud, with clear differentiation from the do it yourself approach of the industry giants.

For 2013, Rackspace reported earnings of $86.74 million, or 61 cents a share, on revenue of $1.53 million. Rackspace had $103,886 servers at the end of the quarter.