Citrix Meets Lowered 2Q Guidance, Updates Sales And Channel Strategies

Citrix Systems Wednesday met lowered guidance for its second quarter and unveiled forthcoming changes to its sales and channel strategies, including a revamped incentive model, a trimmed partner force and open licensing.

The changes will be implemented over the third and fourth quarters in an effort to spur sales, said Mark Templeton, president and CEO of Citrix, based here, during a conference call.

"Over the next two quarters we'll be introducing the elements of a go-to-market program that are really designed to help us better meet customer needs, to improve selling incentives for productive business partners and open up new market opportunities for the Citrix ecosystem," Templeton said.

The company plans to remodel selling incentives for its solution provider partners to reward them for driving more business, particularly with small- and midsize customers, Templeton said.

Citrix also plans to drop "nonproductive members" of its partner program, the Citrix Solutions Network, he said.

In addition, Citrix plans to launch a new open-style licensing model to push e-licensing rather than shrink-wrapped products, he said.

"[Open licensing] really caters to the way certain types of customers, especially middle market and large-scale customers, like to buy their first adoption, and frankly it's the way small/medium-size customers like to buy when they get a little bit more committed to a product," Templeton said.

Citrix's second-quarter financial results, including a 20 percent dip in revenue and a more than 50 percent decline in earnings, reflected weakness in sales of shrink-wrapped products, Templeton said.

"Weakness in packaged-product purchases caused distributors to reorder less from us and reduce their on-hand inventory. This impacted our results substantially," he said.

The results were in line with the lowered guidance for the quarter issued by Citrix on July 8. At that time, the company revealed plans to cut 10 percent of its 1,900-member worldwide workforce.

For the quarter ended June 30, the company reported earnings of $10.8 million, or 6 cents per share, down 53 percent from $22.9 million, or 12 cents per share, the same quarter a year ago.

Excluding the effects of write-offs for in-process research and development and amortization charges, the company reported earnings of $13.5 million, or 7 cents per share, compared with $36.3 million, or 19 cents per share, the same quarter last year.

Revenue for the quarter dipped to $117.5 million, down 20 percent from $147.3 million in the same quarter the prior year.

Wall Street analysts expected the company to earn 6 cents per share on revenue of $116 million, according to First Call/Thomson Financial.

For the third quarter, Citrix expects to report earnings in the range of 6 cents to 9 cents per share on $110 million to $115 million in revenue.

Shares of Citrix closed up 29 cents Wednesday at $5.60 prior to the announcement.