Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So What: There are twin engines behind this move: speculation that Dell (Nasdaq: DELL ) might choose to buy Rackspace to expand its cloud-computing acumen, and a halo effect around strong results from rival Terremark Worldwide (Nasdaq: TMRK ) . Rackspace has now returned 43% over the last three months to its shareholders, or 52% in six months.
Now What: You'll notice that neither the takeover rumor nor Terremark's spectacular quarter speak directly to Rackspace's own business. The company is set to report earnings next Monday, and it has a history of delivering exactly what analysts are looking for. As for the takeover chatter, Rackspace is a fabulous business, with Dell as a major equipment supplier. Given the synergies the two companies could jointly exploit, it would be silly to write off the possibility.
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