(Reuters) - Rackspace Hosting Inc’s RAX.N chief executive of seven years is retiring as the web hosting company looks to transition into a cloud software developer.
The company, whose shares fell as much as 13 percent in extended trading, also forecast lower-than-expected revenue for 2014.
Lanham Napier, 42, who has led the company since 2006, was replaced by Rackspace’s co-founder and former CEO Graham Weston.
Rackspace, which leases online storage space to companies, said it would work to establish itself as a service provider for hybrid cloud, which involves storing data partly on the customers’ premises.
“We’ll continue to build our capability in the software, build more software that helps our hybrid cloud operate better ... we’re going to continue to run more and more private clouds for companies on-premise,” Weston said on a conference call with analysts.
The company, whose recent customer wins included Directv DTV.O and Swiss watch maker Swatch, forecast 2014 revenue of $1.77 billion to $1.8 billion, largely below analysts’ estimate of $1.79 billion.
Rackspace said it has started a search process for a long-term CEO and retained an executive recruiting firm.
Napier will remain as a consultant with Rackspace to ensure a smooth transition, the company said.
Rackspace’s net income fell to $20.8 million, or 14 cents per share, in the fourth quarter, from $29.9 million, or 21 cents per share, a year earlier.
Revenue rose 15.6 percent to $408.1 million.
Analysts on average had expected earnings of 14 cents per share on revenue of $404.6 million, according to Thomson Reuters I/B/E/S.
Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Don Sebastian