NEW YORK (TheStreet) -- Shares of Rackspace Hosting Inc. (RAX) are up 6.90% to $39.81 in pre-market trading after it was reported that CenturyLink (CTL) , the landline phone service provider, is seeking to acquire the open cloud company to further expand into cloud computing services, sources told Bloomberg.
CenturyLink has discussed the idea with Rackspace, which last month said it is still conducting an internal review of its strategic options, sources said.
One person said a deal may not be reached for the company, which had a stock market valuation of $5.33 billion at the end of last week, Bloomberg noted.
TheStreet Ratings team rates RACKSPACE HOSTING INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate RACKSPACE HOSTING INC (RAX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and disappointing return on equity."