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Rackspace Emerges Top Performer for 2011

DAILYHOSTNEWS, January 05, 2012 – Rackspace Hosting has been pursuing a “best of both worlds” strategy, continuing to generate profits from its successful managed hosting operations while it rapidly builds a footprint in cloud computing. That approach has paid off for stockholders, as Rackspace shares rose 36.9 percent during 2011, making it the best-performing data center stock for the year.

Rackspace (RAX) has been making more money from each square foot of data center space with each successive quarter. In 2011 it continued to add data center capacity to further scale up its revenue. Meanwhile, it sought to leverage its leadership role in Open Stack, an open source cloud computing platform.

Here’s a look at the full-year 2011 performance for the stocks we track on our Data Center Investor list:

It was a strong year for the wholesale data center sector, as CoreSite Realty (COR) and Digital Realty Trust (DLR) finished with gains of about 30 percent, while DuPont Fabros Technology (DFT) was up nearly 14 percent on the year. All three benefited from a strong leasing environment, as well as growing attention to the strength of the data center REITS compared to other real estate asset classes.

All three easily outpaced the Dow Jones Industrial Average, which improved by 5.5 percent on the year, as well as the S&P 500 (flat for the year) and the Nasdaq composite index (-1.8%).

The content delivery sector fared the worst, as Akamai (AKAM) and rival Limelight Networks (LLNW) lost 31 percent and 49 percent, respectively, for the year. Both stocks were battered by the increasingly competitive CDN market, which led to declines in pricing for many services.

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