Rackspace Hosting (NYSE:RAX)

CAPS Rating: 4 out of 5


Player Avatar adb11 (94.29) Submitted: 1/23/2010 9:27:10 PM : Underperform Start Price: $21.17 RAX Score: -28.37

Being a Rackspace customer, I got a very disappointing glimpse into their inner workings. Due to their sales guy not fulfilling his promises and then denying promising anything, currently in the middle of multiple thousand dollars billing dispute. Even getting higher ups involved, a culture of covering up for each other in the sales team. Not finished escalating the issue (still open after 3 months...) but so far have dealt with 3 people seriously lacking the skill to even handle dissatisfied customers. I can tell you our $30,000 a year revenue to Rackspace will be gone as soon as we can get out of their mess. This business is going down.

Report this Post 6 Replies
Member Avatar galtline (33.07) Submitted: 4/28/2010 5:59:21 PM
Recs: 0

So...what was the dispute?

Member Avatar facethejase (< 20) Submitted: 1/28/2011 4:25:10 AM
Recs: 0

Sounds like sour grapes to me

Member Avatar TMFMileHigh (73.49) Submitted: 2/16/2011 1:35:39 PM
Recs: 0


I wonder if you'd be willing to give us an update? I don't dispute your characterization -- how could I possibly? -- but it's an outlier compared to what we've heard from other customers. I'd love to hear how RAX ultimately responded. Did the company ever make good? How badly did the relationship end?

Sorry to hear about your trouble and Foolish best,

Tim (TMFMileHigh and @milehighfool on Twitter)

Member Avatar adb11 (94.29) Submitted: 7/6/2011 5:55:22 AM
Recs: 0

Just realized here people were commenting...!

It took a total of 9 months to settle the dispute (started in October 2009 and ended in June 2010). The US team would have just left us with $6,000 of losses. I got lucky to meet their head of Asia Pacific at some business gathering and told him about the issue; after a few follow ups he credited us for $6,000. That got me to stay with them a 8 more months since the credit has been used.

We're now using 2 years+ old hardware and after giving them a chance to lower their prices (where no one there bothered to even drop a dollar on their current price), we are moving from $2,000/month with Rackspace to better servers for $900/month with Gigenet. Although this pick certainly is hurting my CAPS rating, I dont believe in this company one bit more than I did before (after all, the head of Asiapac runs a little portion of the show, and in his case, credited us without actually having us as customers, we have only been customers of the US team) and I would short it twice more now if I could. Of course, this is one rare pick of mine that is not based on rational numbers, but simply personal experience, which can easily prove emotions dont work well with investing :)

However, this time we have decided to leave them because they are far from being competitive anymore.

Member Avatar greyecho (< 20) Submitted: 4/22/2012 1:23:49 PM
Recs: 0

Meh... Rackspace is good, this guy just is too hard to please. Google "rackspace" along with words like opinion, review, comparison, etc. You'll see this guy's rants are pretty specific.

Member Avatar dyriam10 (< 20) Submitted: 5/1/2012 2:40:14 PM
Recs: 0

Treating customers properly is the smart thing to do. I'd pick Amazon over RAX any day for cloud services (- and pretty much anything else too.)

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