Citrix Will Spin Off GoTo Product Line Into New Company, Cut 1,000 Jobs

The Citrix Systems makeover partners and customers had long been expecting finally got rolling in earnest Tuesday with the virtualization vendor revealing that it would spin off its popular -- but not core -- GoTo line of products into a separate, publicly traded company.

The split comes with layoffs -- Citrix will be eliminating 1,000 positions, about one-tenth of its total workforce. It's still unclear what units will be hit by staffing cuts.

While GoToMeeting, a popular collaboration platform, and its Software-as-a-Service brethren weren't a big channel play, the separation, and the layoffs, will likely reverberate through the vendor's global partner network.

[Related: Q&A: Meet Kimberly Martin, Citrix's New Channel Chief]

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The line of SaaS products that will find themselves under a new corporate roof includes GoToMeeting, GoToAssist, GoToMyPC, GoToTraining, GoToWebinar, Grasshopper and OpenVoice. Together, over the past year they constituted a business that saw $600 million in sales.

Chris Hylen, the senior vice president who runs the Citrix Mobility Apps Business Unit, will take the helm of the as-yet unnamed company as CEO.

Citrix partners had been waiting many months for a major shakeup in line with demands from activist investor Elliott Management, which wanted Citrix to focus on its core business of virtualization and enterprise solutions and ditch the GoTo family.

A major component of that effort to narrow its scope has been the prolonged rollout of Cloud Workspaces -- hailed by Citrix's leaders as a transformational product that will firmly establish Citrix's position as a hybrid cloud provider and enabler.

Carl Gersh, director of sales and marketing for Synergy -- a Miramar, Fla., solution provider that has partnered with Citrix for two decades -- told CRN that while GoToMeeting is a popular business solution, Citrix never truly leveraged that foothold with line-of-business leaders to expand its core virtualization business by merging the markets.

"Citrix had that audience, but wasn't necessarily converting them into the core suite of virtualization and data center products," Gersh said. "If they had, it might have been a more critical element of their core business strategy."

Citrix took hold of GoToMyPC and GoToAssist in 2003 with its $225 million acquisition of Expertcity, a Santa Barbara, Calif.-based early entrant in the SaaS market. Citrix also acquired the technology assets for GoToMeeting, a product released the following year.

While the company has dual headquarters in Fort Lauderdale, Fla., and Silicon Valley, the GoTo division through the years remained situated in Santa Barbara.

Because those products were never fully integrated with Citrix's virtualization portfolio from a sales and channel perspective, Gersh said, the overall implications of the split will likely be negligible for the vendor's channel.

"Despite Synergy being a Citrix partner for 20 years, we use GoToMeeting, but we don’t sell a lot of GoToMeeting," said Gersh, who worked four years at Citrix as part of the field and channel marketing team. "What's curious is going to be the strategy going forward. Are they going to enrich the channel more?"

And in that sense, divesting from the GoTo business might benefit Citrix partners by freeing up marketing resources, he said.

While there's never been a clear delineation of investments in GoToMeeting verses other Citrix solutions, that product line certainly benefits from a lot of high-profile advertising to generate demand and awareness, Gersh said.

With GoTo no longer in the mix, Gersh said he hopes "they refocus and double down" on "investing in promoting and advertising that core business that's important to us."

But Gersh is also concerned about how the layoffs will impact channel operations, something he doesn't expect to know until Citrix reveals over the next day or two what divisions will lose staff.

Citrix's sales apparatus is already weighted toward direct sales, he said.

"If they carve out people, some might be channel-facing folks, and that team is already not very robust. That’s a concern, but hopefully it'll be minimal," Gersh said.

Earlier this year, Citrix eliminated 700 full-time and 200 contract positions as part of a corporate restructuring around its cloud, networking and enterprise mobility products.

More financial information about the spinoff will be revealed later on in a filing with the U.S. Securities and Exchange Commission, according to Citrix.

Bob Calderoni, Citrix's interim CEO, in a prepared statement said a review made clear the GoTo family would operate best as a standalone business.

’This separation will create a leading, pure-play SaaS company that will have a targeted focus with the flexibility to invest in its portfolio of products. It will also allow Citrix to refocus and amplify investment in our core mission to enable secure and reliable delivery of apps and data for the modern enterprise,’ Calderoni said.

At the behest of Elliott Management, Citrix parted with longtime CEO Mark Templeton last month, one of many changes the New York-based hedge fund telegraphed earlier in the year.

Geoff Woollacott, an analyst with Technology Business Research, told CRN the move "seems a pretty standard play."

Calderoni, who previously was CEO of software developer Ariba, is a chief financial officer by trade, Woollacott noted.

"So this is all about cutting out the organizational kudzu and handing a lean organization over to the new CEO," Woollacott told CRN.