Rackspace revenue misses analysts' estimates, shares fall

(Reuters) - Web hosting company Rackspace Hosting Inc reported a 25 percent rise in fourth-quarter revenue that fell slightly short of analysts' estimates, sending its shares down nearly 9 percent in trading after the bell.

Rackspace said its revenue rose on strong demand from companies storing data in its servers. Many small and medium-sized firms have been migrating to hosting their applications in the cloud as a low-cost alternative in a slow-growth economy.

These applications run on servers and hardware provided by companies like Rackspace, bringing significant costs savings.

Rackspace's net income rose to $30 million, or 21 cents per share, in the fourth quarter, from $25 million, or 18 cents per share, a year earlier.

This was in line with analysts' estimates, according to Thomson Reuters I/B/E/S. But revenue of $353 million for the quarter missed analysts' average estimate of $355.4 million.

Shares of San Antonio, Texas-based Rackspace fell to $68.24 in trading after the bell, after closing at $74.98 on the New York Stock Exchange on Tuesday. They have gained about 38 percent in the last six months.

(Reporting by Chandni Doulatramani in Bangalore; Editing by Sriraj Kalluvila)