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Citrix Announces Corporate Restructuring, Layoffs

IT firm Citrix announced that it will be restructuring its company, which includes spinning off its "GoTo" line of products and layoffs for about 1,000 employees.

GoTo Somewhere Else
Citrix said in a press release that it was spinning off the products -- which include GoToAssist,  GoToMeeting, GoToMyPC, GoToTraining, GoToWebinar, Grasshopper and OpenVoice -- to "focus on its strategic solutions for secure and reliable delivery of applications and data." Citrix said those products amount to about $600 million in revenue. Given that Citrix revenues for all of 2014 were $3.14 billion, the spinoff will take away about 20 percent of the company's sales.

In a separate press release discussing its financials for the future, Citrix said those "strategic solutions" include the products XenApp, XenDesktop, XenMobile, ShareFile and NetScaler. The moves are expected to save Citrix in the realm of $200 million ann ually, the company said. It expects that about 75 percent of those savings will come in fiscal year 2016.

The layoffs themselves will cost Citrix between $65 million - $85 million, mostly due to severance arrangements, the company said.

Anemic Growth
"We are simplifying our business in all areas – product, marketing, sales, operations and development," Bob Calderoni, interim CEO and president, said in the release. The simplification and layoffs, Citrix says, should result in growth of 1-2 percent next year, and 4-5 percent through 2017.

Brian Madden, a well-known blogger covering the virtual desktop infrastructure space, wasn't impressed by those figures. "For 2016, Citrix is setting a goal of 1-to-2 percent revenue growth, which, let's face it, is codename for zero," Madden wrote. "They're targeting 4-to-5 percent revenue growth for 2017, which, again, seems darn close to zero. I mean really… saying your best case scenario is 5% growth in two years? Yeah… I'm calling that zero."

Downward Trajectory
Citrix's downward spiral has been a long, slow one, but has picked up speed since investment company Elliott Management came on board. Elliott is known for taking an activist role, and demanding swift and significant changes for floundering businesses. They suggested early on that GoTo be spun off as a separate company. A look at the changes in just the past year paint a portrait of a company undergoing radical surgery for its long-term survival:

  • Serious revenue declines in 2014, along with approximately 900 layoffs at the beginning of the year. Those layoffs were predicted to save Citrix between $90 million - $100 million. Prior to that layoff of 700 employees and 200 contractors, Citrix ended 2014 with a little over 10,000 employees, according to S.E.C. filings.
  • CEO Mark Templeton announced his retirement. He was named CEO in 2001.
  • The killing off of several once-important products, including VDI-in-a-Box, and, more recently, XenClient.

The renewed emphasis on application and data delivery was demonstrated in August with the unveiling of Workspace Cloud, which Citrix described as "A single unified, global, and multi-tenant SaaS platform to create complete workspaces." One of the aspects that most distinguishes Workspace Cloud is its focus on the red-hot area of enterprise mobility management. XenDesktop and XenApp are at the heart of Workspace Cloud, which is cloud agnostic, allowing customers to use it on the Amazon Web Services or Microsoft Azure public clouds, for example.

So Long, XenServer
One product with the "Xen" prefix missing from the "going forward" lineup is XenServer, which was once one of Citrix's most crucial offerings. It was supposed to compete directly with hypervisors like VMware's ESXi and Microsoft's Hyper-V, but never had the uptake to make it a serious player in the compute virtualization space. The main competitor to those two now is KVM, which is carving out a niche in convergence and hyperconvergence products from up-and-coming vendors like Nutanix, SimpliVity and Scale Computing. It's also used in most OpenStack deployments.

About the Author

Keith Ward is the editor in chief of Virtualization & Cloud Review. Follow him on Twitter @VirtReviewKeith.

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