[THIN] Re: ARTICLE: Citrix to pink slip 10 per cent
- From: "Doyle, Kevin" <Kevin.Doyle@xxxxxxxxxxxxxxx>
- To: "'thin@xxxxxxxxxxxxx'" <thin@xxxxxxxxxxxxx>
- Date: Fri, 19 Jul 2002 07:14:00 -0500
Gee...raise prices and demand from small businesses (and govt. agencies)
decline....
Someone needs an economics refresher.
-----Original Message-----
From: Jim Kenzig http://thethin.net [mailto:jimkenz@xxxxxxxxxxxxxx]
Sent: Thursday, July 18, 2002 4:50 PM
To: thin@xxxxxxxxxxxxx
Subject: [THIN] ARTICLE: Citrix to pink slip 10 per cent
From theregister...hmmm.
JK
Citrix to pink slip 10 per cent
By IT Analysis
Posted: 15/07/2002 at 09:33 GMT
http://www.theregister.co.uk/content/53/26186.html
With its Q2 figures due to be announced on July 17th, Citrix has given a
broad hint as to the likely outcome and is pre-empting the results by
announcing that it expects to layoff around 10 percent of its staff.
This time last year, Citrix earned revenues of $147 million for the second
quarter. The expectation for 2002 is somewhere between $116 million and $118
million. Profits will dip from 12 cents per share to somewhere between 5 and
6 cents. This may be adjusted to exclude amortization charges and
write-offs, giving earnings of between 6 and 7 cents per share.
Citrix is not seeing this as a temporary blip. The estimate for Q3 revenues
is set between $110 million and $115 million and the full year figures are
expected to come in at around $490 million. It is not surprising, therefore,
that it has felt the need to take quick action.
The immediate consequence of the reduced profitability is that the
world-wide headcount will be reduced by 10 percent. It is believed that the
current staffing levels are just below 2000 and so we can expect 200 job
losses to occur. In addition to this, there will be a significant reduction
in sales and marketing expenses but will focus more on direct sales, so it
shouldn't be too difficult to work out where the lay-offs will be focussed.
The interesting part of the announcement, made by President and CEO, Mark
Templeton, is his analysis of where things might be going wrong. The
indications are that revenues from electronic licenses and software
subscriptions are increasing by 15 percent. The problem seems to lie in the
acquisition of new small customers.
This is an area where Citrix has, traditionally, done reasonably well as
small business look to MetaFrame as a solution to their terminal server
requirements. In times of hardship, it seems, that they turn to the free of
charge option from Microsoft. Microsoft Terminal Server is another of those
bundled layers that offers the connectivity options that these small
businesses need but without some of the added value that Citrix usually
looks to provide.
Templeton expects that these companies will, eventually turn to Citrix once
they realise that they need that extra value. This has the effect of
lengthening the sales cycle for Citrix - in the shrink-wrap market that
usually has no sales cycle at all.
Does this mean that one quarter or two quarters down the road, we should see
those revenue levels picking up again as the Microsoft Terminal Server users
move across to MetaFrame? Clearly the next quarter prediction doesn't assume
so. The problem may be a long-term issue and maybe Citrix needs to do
something to maintain the attention of that audience.
Shame about those marketing staff.
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