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Citrix leadership, strategy overhaul is good news

One outspoken investor is making waves at Citrix, but after a few so-so years it makes sense to move on from some longtime services and chart a new direction.

If you've loved Citrix products in the past (like I have), but felt the company lost its way in the past few years (also like I have), things are about to change.

It all began in June when a hedge fund firm called Elliott Management published a scathing open letter to Citrix about its performance over the past few years. Elliott described Citrix's recent execution as "terribly poor" and called the company out on several specific instances, including the bungled killing and then unkilling of XenApp, and the lack of many key features in XenApp 7.x. Elliott also accused Citrix leadership of lacking focus, claiming the company made several overpriced, nonstrategic investments and spends too much time hyping up noncore products and concepts.

Ordinarily it might be tempting to ignore this type of nontechnical blunder, but Elliott owns more than 7% of Citrix's common stock -- a stake worth almost $1 billion dollars. When a billion-dollar shareholder starts making noise, people listen.

Unsurprisingly, reaction to Elliott's letter was mixed. Many people, myself included, nodded their heads in agreement. Other people were upset, claiming that Elliott was an 80s-style corporate raider that was just trying to implement a short-sighted scheme to dismantle the company, pump up the stock and exit.

Most people believe that Elliott's influence is a good thing.

Fast forward, and it looks like the "Elliott plan" has come together. Citrix recently announced that it has signed an agreement with Elliott where the company would get a board seat (replacing an existing board member), and that Elliott and Citrix would mutually agree on a second new board member to replace another old one. That agreement also specified a one-year standstill, a legal term that means they'll be nice to each other.

The big news though is that Citrix's president and CEO Mark Templeton is retiring and that a search is on for a new CEO. This is interesting because Templeton originally announced his retirement 18 months ago, only to decide a few months later that he would not retire after all. At that time he affirmed a multiyear commitment to Citrix.

Of course, multiple years haven't actually passed since Templeton decided not to retire, and his retirement has been interpreted by many as a polite way to say that Elliott fired him. So Templeton is on his way out, and the company that said Citrix needed to make a lot of changes has a board seat. Where does that leave us?

We can probably assume that many of the changes Elliott outlined in its open letter will either start to happen or at least be seriously considered. At this point it looks like Citrix's GoTo business (GoToMyPC, GoToAssist, GoToMeeting) is for sale. It also looks like Citrix will focus on its core business of XenApp and XenDesktop.

At the end of the day, even though the pill has been bitter, most people believe that Elliott's influence is a good thing. My colleague Gabe Knuth asked the simple question: Are you happier with Citrix products now versus three years ago? Unfortunately the general sentiment among customers has been "no," but since Elliott seems to be getting its way and playing a more active role in Citrix leadership and strategy decisions, hopefully customers will start answering that with a "yes" in the next year.

And that's a good thing for everyone.

About the author:
Brian Madden is an opinionated, supertechnical, fiercely independent desktop virtualization and consumerization expert. Write to him at [email protected].

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