Citrix To Cut Staff By 10 Percent; Expects 2Q Earnings, Revenue Dip

The Fort Lauderdale-based software vendor employs approximately 1,900 people, according to its Web site.

In addition to cutting its workforce, Citrix also plans to curtail sales and marketing program expenses, said Mark Templeton, president and CEO of Citrix, during a conference call with analysts.

However, the company does not plan to increase direct sales, which currently account for about 5 percent of its revenue, Templeton said.

"If anything, we'll be looking to bolster our partners, probably bring on some new regional system integration relationships and then work with our Gold and Platinum partners around the world and try to shore them up," Templeton said. The company is looking at adding selling incentives for partners in efforts to drive business, he said.

Templeton attributed the primary weakness during the quarter to lower-than-anticipated sales of packaged products, which dropped 6 percent to 9 percent sequentially, he said.

Citrix historically sells packaged software to smaller customers and first adopters of its MetaFrame server-based computing platform, clients whose purchases are often discretionary and sensitive to overall business confidence, Templeton said.

In contrast, Templeton said electronic licensing to larger customers for the quarter was up about 15 percent over the previous quarter.

Renewals of software subscriptions were also up 15 percent sequentially, he said.

"Based on preliminary point-of-sale reports and estimates, end-customer product demand was approximately flat to [first-quarter levels," Templeton said. End-customer product demand is equal to packaged product sales out of distribution plus all electronic licensing, he said.

Distributor inventories declined significantly during the quarter as larger distributors are trying to reduce days-on-hand for software to 30 days instead of the typical 45 days, he said.

In some cases, solution providers have reported that customers are delaying MetaFrame sales, he said.

"Anecdotally, some resellers have indicated that, due to budget constraints, some shrink-wrap customers are opting to deploy [Microsoft's Terminal Services, forgoing MetaFrame on their initial implementation," Templeton said. "They also indicate essentially all of their customers that do this have eventually or will eventually add MetaFrame," he said.

According to preliminary results for the quarter ended June 30, Citrix expects to report revenue in the range of $116 million to $118 million, compared with $147 million for the same quarter a year ago.

The company expects earnings for the quarter to range from 5 cents to 6 cents per share, compared with 12 cents per share a year ago.

Citrix expects earnings adjusted to exclude the effects of amortization charges and write-offs to be 6 cents to 7 cents per share, compared with 19 cents the same quarter last year.

Templeton said revenue for the third quarter will likely range from $110 million to $115 million.

Earnings for the year will likely range from 40 cents to 45 cents per share on revenue of $485 million to $495 million, he said.

"From a competitive perspective, we have not, to date, seen any unusual impact from direct competitors or other application architectures," Templeton said.

One such competitor, New Moon Systems, San Jose, Calif., earlier this month said it has signed up more than 100 resellers worldwide to sell its Canaveral IQ server-based computing platform since launching the product last September.

Citrix is scheduled to release final results for the quarter on July 17.