While changes to Citrix's products and services might be coming, IT observers hope its long-standing enterprise products aren't affected.
After Citrix said it would eliminate 900 total employees, and sunset some products and features earlier this year, several recently published reports indicate it's considering a leveraged buyout and possibly becoming a smaller company focused on cloud and application delivery.
Citrix's Q1 2015 earnings were $20 million below projections and just 1% above the same quarter in 2014.
Last month, Elliott Management Corp., a New York hedge fund that owns 7.1% of Citrix, published an open letter to Citrix's board of directors, outlining numerous changes it believes could bump Citrix's stock price from around $70 now to $90 to $100 by the end of next year.
In addition, Elliott criticized Citrix for "funding speculative [research and development] initiatives without clear route-to-market or tangible competitive advantage," and for a product portfolio that is "too broad for its scale and contains far too many underperforming product lines."
Citrix has also seen a number of key senior executives leave the company in recent months, including former senior vice president of worldwide sales and services Al Monserrat -- now CEO of RES Software -- and former senior vice president and general manager of Citrix's enterprise and service provider division Sudhakar Ramakrishna -- now CEO of Pulse Secure LLC. Citrix also lost two executives, Sumit Dhawan and Bob Schultz, to its chief end-user computing (EUC) rival, VMware.
VMware's jump onto Citrix's long-held EUC turf has also been a challenge for Citrix to overcome, said David Johnson, analyst with Forrester Research Inc. in Cambridge, Mass.
"[VMware] is making it harder for [Citrix] to succeed in a market where they've spent a lot of capital," Johnson said.
Citrix rights EUC wrongs
While Citrix has committed to its core EUC products, including XenApp, XenDesktop and XenMobile, observers don't think Citrix should stop there.
Citrix must look to the future because "Windows desktops aren't going to be around forever," said Matt Kosht, an IT director at a utility company in Alaska and a longtime Citrix customer.
Citrix purchased mobile device management vendor, Zenprise, in late 2012, and eventually modified it into enterprise mobility management (EMM) suite, XenMobile. It has also made a commendable investment in Internet of Things through its recent purchase of Octoblu, Kosht said.
David Johnsonanalyst, Forrester Research
"EMM is going to become the group policy of the future," he said. "[Citrix] read that trend early and that's going to pay off for them in the long run."
Citrix's research and development efforts may be better served on development processes that focus on a specific outcome rather than the "speculative" initiatives Elliott criticized them for, said Craig Mathias, analyst and founder of the Farpoint Group, a wireless advisory firm in Ashland, Mass.
"You should be able to get there under reasonable circumstances," Mathias said.
Observers also think Citrix has done a better job recently listening to its customers around its core products. When XenApp 7 was released in 2013, it moved off the Independent Management Architecture it had used since 2007 to the FlexCast Management Architecture, a move that resulted in lost features and dissuaded some IT shops from migrating off XenApp 6.5.
In its letter, Elliott said these issues "demonstrated a disconnect between customer requirements and development roadmaps."
"They're turning their attention back on the product, and that's a good thing," Kosht said.
Meanwhile, the company is also working to deliver an entirely new workspace development and delivery model, Citrix Workspace Cloud. It is expected to be available later this year.
What should stay or go for Citrix?
While Elliott didn't outright suggest Citrix should sell NetScaler, the idea of selling it was met with disdain from those who closely follow the company's products.
NetScaler is integral to Citrix's core value of delivering apps and desktops with a satisfying user experience, Johnson said.
"[NetScaler is] very much specialized for desktop application delivery and I think that's important for [Citrix's] business," Johnson said.
NetScaler is the type of offering that can also help make other Citrix products "sticky" in an organization because of how it helps with app delivery, Johnson added.
"If [Citrix] doesn't have something to offer in that space, that's a mistake," Kosht said of NetScaler.
As for the GoTo franchise, some of its components have more enterprise value than others. For example, businesses can use GoToMyPC as a way to access corporate desktop and application resources remotely, and it fits well with Citrix's digital workspace delivery portfolio, Johnson said.
GoToMeeting, on the other hand, doesn't have quite the same enterprise appeal and also doesn't act as a gateway to the rest of Citrix's workspace portfolio, Johnson said.
"What's more important for clients is what's going to work with Microsoft Lync," he said.
In addition, the GoTo products have more of a consumer appeal than other Citrix offerings and could be moved in part because they don't fit with what Citrix traditionally offers, Kosht said.
Citrix declined to provide comment for this story beyond its statement last month in response to the Elliott letter. At that time, Citrix said it welcomed Elliott's input and will respond to its suggestions as the company does with all shareholders that engage with the company.
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