Dell Inc. (DELL) Clears The Decks To Buy Rackspace Hosting, Inc. (RAX)

Dell Inc. (NASDAQ:DELL)’s latest move doesn’t mean it’s abandoning cloud. It means, for the present, it’s looking at others to sell access to its clouds, which will be based around the world, in order to avoid the problem caused by Amazon’s low, low prices.

Your Downside Looks Protected

And even if Dell doesn’t buy Rackspace Hosting, Inc. (NYSE:RAX), even if Rackspace continues to falter, someone else will. HP might. IBM might.

In other words, you have downside protection on your Rackspace investment. Dell Inc. (NASDAQ:DELL)’s recent gains mean it can do an all-stock deal for Rackspace Hosting, Inc. (NYSE:RAX) that gives it two-thirds of the resulting company, a controlling interest. HP, believe it or not, could still buy Rackspace for cash.

Rackspace, in short, is in play, if not in fact then in a virtual sense. In a cloud sense.

Dana Blankenhorn has no position in any stocks mentioned. The Motley Fool recommends Rackspace Hosting.

The article Dell Clears The Decks To Buy Rackspace originally appeared on Fool.com.

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