XLK Technology Select Sector

The frontiers of technology are full of great new innovations that quickly become commodities. The so-called cloud revolution for data storage and software application usage may soon have its own "commodity moment" for firms competing to win and sustain business.

And one company currently experiencing the pain of pricing pressures is Rackspace Hosting (RAX), a leading provider of hosting services in which the company provides IT infrastructure and management for customers' Websites, applications, and other computing needs through its data centers and cloud services.

RAX slipped to Zacks Rank #4 (Sell) and then a Rank #5 (Strong Sell) last week after analysts continued to lower earnings estimates. Full year 2013 profit projections have been taken down by over 11% in the past two months since the company's last quarterly report on February 12.

The impetus for the downward revisions has been Rackspace's announced pricing changes for certain cloud services, including a 33% reduction in the price for cloud bandwidth/CDN services and the introduction of tiered pricing for its object storage service that equates to volume discounts.

Here' the Zacks proprietary Price & Consensus chart which tracks annual estimate changes and plots them against the stock price.