There appears to be a bit of shakeup going on over at Citrix, the venerable distributed computing company. Long-time Citrix CEO Mark Templeton has announced his retirement, even as activist investor Elliott Management installs its representative as a board member—with another seat to be filled as well.
Once the pioneer in distributed architectures, “dumb” terminals and desktop virtualization, Citrix has evolved into application and server virtualization as well as software-as-a-service and cloud offerings.
But Elliott Management, which was revealed as having a 7.1 percent stake in the company in June (it’s now 7.5 percent), has made it known that it would like to see a scaled-down company that can deliver more shareholder value. To that end, the CloudBridge, CloudPlatform and ByteMobile lines of business all need to go, it has said, and GoToMeeting and NetScaler could be on the block as well.
But it will take votes to make that happen, and it would appear that it will get them. For one, Elliott partner Jesse Cohn has joined its board, replacing Asiff Hirji, who stepped down. And, Citrix agreed to add another independent board member to be agreed upon by the company and Elliott.
“We appreciate Citrix’s constructive approach and are pleased to have worked collaboratively with the board and management team to reach this cooperation agreement,” said Cohn. “We first invested in Citrix because we saw a substantial value creation opportunity for the company and its shareholders. We are confident that the initiatives announced today and the addition of new directors to the company’s board will allow Citrix to build upon its position as an innovative industry leader, and to drive significant shareholder value. We look forward to remaining a shareholder and working closely with the company towards our mutual goal of positioning Citrix for success and value creation.”
In addition, some affiliates “agreed to customary standstill, voting and other provisions” for at least a year—paving the way for Elliott to push its agenda along as a greater share of the vote.
“We believe the addition of new and fresh perspectives to our board will ensure Citrix continues to lead in application networking and virtualization markets,” said Thomas Bogan, lead independent director for Citrix.
Templeton will stay on until a replacement is found. He joined Fort Lauderdale, Florida-based Citrix in 1995. He was named president in 1998 and became CEO three years later.
The news comes as the company reported better-than-expected earnings in its most recent quarter and raised its outlook for the year.
The quarter ended June 30, and Citrix reported earnings of $103.3 million, or 64 cents a share, up from $53 million, or 31 cents a share, a year ago. Revenue rose 1.9 percent to $797 million. On an adjusted basis, the company earned $1 a share, up from 83 cents.
The company also raised its guidance, saying it now expects to earn $3.65 to $3.75 a share on $3.22 billion to $3.25 billion in revenue for the year, compared with its earlier view of $3.55 to $3.60 a share on $3.22 billion to $3.25 billion.
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