VentureBeat

Braving a tough public market, web-hosting company Rackspace held its IPO and is now trading on the New York Stock Exchange under the ticker symbol “RAX.”

San Antonio, Texas-based Rackspace (which hosts VentureBeat), announced the IPO last night, selling 15 million shares priced at $12.50. That raises a total of around $187 million, less than half the $400 million the company had hoped for when filing to go public in April.

Still, any IPO at all is encouraging after a quarter without a single venture-backed IPO. Trading opened at $10 per share, rose to $11.58 and is currently at around $10.75.

Rackspace was founded in 1996 and raised around $30 million in funding. Backers include Norwest Venture Partners and Sequoia Capital, who owned 16.2 percent and 11.6 percent, respectively. Chairman and former chief executive Graham Weston owned 23.9 percent.

Rackspace says it has more than 33,000 customers worldwide, with $362 million in revenue last year.

Here’s the latest action:

Another Google exec heads to Facebook – Elliot Schrage, Google’s vice president of global communications and public affairs will become the vice president of communications and public policy at Facebook, BoomTown’s Kara Swisher has learned. “This is a really important role for us and one that we’ve been trying to find the right person for a while. Elliot’s role will be critical to helping us scale based on our culture that values transparency, openness, and honest internal communications,” Facebook chief executive Mark Zuckerberg said in a memo to employees.

Schrage becomes the latest in a string of Googlers who have left for Facebook. As one commenter joked on FriendFeed earlier: “Facebook now imports Google execs…” Valleywag caught wind of Schrage’s interview at Facebook first.

Mosso to add more storage to the cloud — The cloud computing division of hosting provider RackSpace will be launching a new online storage service called CloudFS later this year, according to CNET. Developers will have access to almost limitless amounts of storage at the cost of 15 cents per gigabyte. This will compete against similar services from Amazon and eventually Google.

AP launches news site geared towards iPhone — The Associated Press and the 100+ newspapers it services will allow owners of the device to type in their zip code and get personalized news. Apple gave the service pointers about how to best build such a site. So you know the integration is good.

Sun gives developers OpenSolaris, wants apps in return — Sun Microsystems gave away OpenSolaris, the open source version of its operating system, at the CommunityOne developers conference on Monday. Sun hopes open source will help it regain relevance in the within the community, according to CNET. The main rival here it thought to be Linux.

Nine Inch Nails keep the free music coming — The rock band has a new album, The Slip, which is it giving away entirely for free on its website. There is no catch, it’s simply a gift for the fans, frontman Trent Reznor explains. Users can choose between a variety of formats and quality. This follows the band giving away the first part of its Ghosts I-IV album and other bands such as Radiohead and Coldplay giving their music away for free over the Internet. The album can also be streamed right from the social music site iLike.

LiveProcess Corp. takes a $3.62 million series A — The Verona, N.J.-based company is a provider of an online application to manage a hospital’s disaster preparedness plans and response. No institutional investors were disclosed, according to PEHub. The company says it’s the only disaster preparedness software endorsed by the American Hospital Association.

EA fires back at Activision — The world’s two leading video game publishers continue to go at it. Activision’s chief executive said that EA “did a very good job of taking the soul out of a lot of the studios it acquired.” EA’s response in an interview with Newsweek’s LevelUp blog: “The truth is, everyone laughed.”

TomCruise.com launches — And thank God. The actor is celebrating the 25th anniversary of his first starring role in Risky Business. Luckily the site has nothing to do with Scientology and everything to do with movies (though there is an interview with Oprah where he discusses the controversial religion). This site can be my wingman anytime.

Rackspace, the web-hosting company known for its quality support, has filed for an IPO (see its filing here), unafraid of what is otherwise a moribund initial public offering market.

The company said it will try to raise $400 million and set its price through an auction.

The underwriters are Goldman Sachs, Merrill Lynch, Credit Suisse, and WR Hambrecht & Co. Google raised its money through an auction, a move that allowed it to raise more money rather than see the proceeds go to first-day investors who flip their stock quickly.

Rackspace revenues grew 62 percent last year to $362 million, the company reported. It profits were $17.8 million, down 10 percent, however. Profits declined because the company expanded staff, sales and marketing. Disclosure: VentureBeat uses Rackspace as its host.

Rackspace had raised more than $30 million over the past decade. It was founded in 1996 by three students at Trinity University: Richard Yoo, Dirk Elmendorf and Patrick Condon. Then, in 1998, Graham Weston and Morris Miller invested seed capital into the company and took over management of the company.

The company won kudos last year when one of its data centers in Texas failed, and in response it offered $3.4 million in credits to customer accounts.

Venture capital forms Norwest and Sequoia will be among the biggest beneficiaries of a successful IPO. Norwest owns 16.2 percent of the company, while Sequoia owns 11.6 percent. Graham Weston, chairman and former CEO, owns 23.9 percent of the company.

TechCrunch caught early word of the IPO filing.

Here’s the latest action:
1) EU delays Google’s DoubleClick acquisition
2) Intellectual Ventures looking for $1B to buy patents
3) Wall Street Journal’s online version to be free
4) Microsoft working on Flickr competitor
5) … and changes the name of its mobile interface
6) Yahoo settles case brought by Chinese reporters
7) Wal-Mart’s $200 desktop sells out in two weeks
8) RackSpace servers go down; Om gets poetic

European Union sets back Google’s DoubleClick acquisition another five months — Saying it needs to examine Google’s proposed acquisition of advertising company DoubleClick in the context of the entire market, the European Union has wrapped up the search giant in another five months worth of red tape. They’ll give their decision on April 2, about a year after Google first decided to buy the company. Of course, the internet doesn’t move on bureuacratic timelines, and you can be sure Microsoft and others eyeing Google’s hefty share of internet advertising revenue will make good use of the time the time to beef up their own competition.

Intellectual Ventures: Carefully positioning its hands around your throat — For years, Microsoft was accused of being the intellectual property bully of the tech world. It’s not so scary now, but former CTO Nathan Myhrvold may be. He’s been busy buying up patents through a company called Intellectual Ventures, and is now raising another $1 billion to buy more. Myhrvold says he hasn’t sued anyone yet, but chances are pretty good that he’s hoping to make a fortune by forcing companies with technology related to the IP he now owns to pay licensing fees. The WSJ has a more in-depth piece on the company here.

Wall Street Journal online to become free — Two months ago, the New York Times removed its Times Select pay wall. Now it looks like one of the last remaining large sites to require payment, the Wall Street Journal, is following in its footsteps. That’s somewhat surprising, since the WSJ seemed fairly successful at charging; in fact, it just broke one million subscribers. However, new owner Rupert Murdoch thinks he can make more off advertising.

Microsoft readies Flickr competitor — Windows Live will soon include a competitor to Flickr, according to a job ad dug up by istartedsomething. “The Digital Memories Experience team (DMX) is helping people make deeper connections with those they care about. We want to give you the ability to effortlessly share your memories … we want to make it easy and fun to enjoy your photos and videos,” the ad claims. We wish them luck, and hope they’ll check with CNET first for advice on how not to run a photo-sharing site.

Microsoft changes mobile interface name — Yes, more from Microsoft. The company has changed the name of its mobile application delivery system, ZenZui, to the almost-equally-meaningless name Zumobi. Apparently they wanted to highlight its “Zooming User Interface”. We wouldn’t blame them for just calling it Zooming User Interface, but perhaps that wouldn’t be Web 2.0 enough. The idea behind Zumobi is delivering a suite of applications to your mobile device; for more information, see our past coverage. Open Access Beta for Zumobi begins on December 14th.

Yahoo settles case brought by Chinese reporters — Following strong criticism of the company by Congress last week, it quickly relented and settled a case brought by jailed Chinese dissident reporters. China, of course, isn’t apologizing for anything. More from Reuters.

Build it (cheaply), and they will come — Wal-Mart’s $200 Green GPC desktop computer, which is basically a shell that connects to online Google applications, has sold out after only two weeks. Its popularity seems to be part of a larger trend toward ultra-cheap computing; there’s also the Asus EEE PC, a $450 stripped-down ultra-slim laptop that has received good reviews, and of course, the One Laptop Per Child notebooks which are currently around $200.

RackSpace’s San Antonio servers go down — A truck that slammed into a power transformer resulted in RackSpace pulling several servers offline, which in turn switched off a few websites, including GigaOm and 37Signals. Om’s moral lesson from the debacle: “Our Internet infrastructure, despite all the talk, is as fragile as a fine porcelain cup on the roof of a car zipping across a pot-holed goat track.” We can’t wait for someone to write that into the risks section of their prospectus.