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Citrix: Hmmm, profit down 30%? Right. 900 HEADS WILL ROLL

Virtualisation biz axing workers, certain leases and products

Hundreds of workers at Citrix Systems are to be shown the door to counter nose-diving profit and boost the R&D pot.

The purveyor of virtualisation, networking and cloud infrastructure stuff last night rolled out results for the three months ended 31 December and sales were up six per cent to $851m – analysts had forecast $844.3m.

The product and licence biz fell one per cent to $267.3m, SaaS jumped 10 per cent to $168.4m, licence updates and maintenance bounced nine per cent to $367m and professional services was up 15 per cent to $48.7m.

However, the problem is operating costs leaped by 10.8 per cent to $559.4m, seriously denting profits, which fell by nearly a third (31.3 per cent) to $95.2m.

As a result, Citrix is purging its cost base of 700 permanent staffers and 200 contractors.

The aspiring cloud provider said the cuts would lead to “operational efficiency” and increase strategic focus, and contribute towards up to $100m in annual savings.

“We’re restructuring to allow us to better reflect our strategy in our organisational model to refocus our investments on our highest growth opportunities and to streamline decision making,” said CEO and president Mark Templeton.

“We’ll also improve our operational efficiency, helping us to continue our positive financial growth and expand our operating margin," Templeton helpfully stated. "I think we all know it’s extremely difficult to make a restructuring decision, understanding how challenging it will be for those employees whose roles are affected."

The job purge involves “simple delayering across the board” and a “simplified organisational structure”, said CFO and COO David Henshall. He said consolidating certain leased facilities and “rationalising” part of the product portfolio was also on the agenda.

Restructuring activity will result in a pre-tax charge in the range of $50m to $55m and annual savings up to $100m, Citrix said.

Workspace Services was the primary business in Q4, up two per cent to $437m, as businesses build more mobile workforces, the NetScaler product drove networking and the comms cloud was the biggest seller for Citrix.

Citrix is attempting to float its own cloud, based on CloudStack, built on assets it bought from and donated to the Apache open-source organisation.

In recent weeks, Citrix has named EMEA head Carlos Sartorius as senior veep for worldwide sales and services, Robson Grieve as senior veep for marketing and Geir Ramleth as senior veep and chief strategy bod. ®

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