Analysts: Signs Show Citrix Not Likely Considering Dell Buyout, Or Any Other Acquisition

Two veteran software industry analysts who recently attended high-level meetings with Citrix executives told CRN they believe it's unlikely the virtualization giant is exploring a quick sale as a whole to Dell or anyone else.

Despite Reuters reporting on Tuesday that Citrix's embattled leadership was considering the option of being acquired outright by another technology firm or private investors, Geoff Woollacott and Andrew Smith, principal analysts at Technology Business Research, a market researcher based in Hampton, N.H., walked away from an analyst event last week with entirely different impressions.

"There wasn't any kind of feeling in the air that that was something Citrix was shopping around," said Smith, who's been watching the industry for decades.

[Related: Partners To Citrix: Heed Elliott Management's Call To Fix What's 'Foundationally Broken']

In the wake of activist investor Elliott Management taking a stake in the company, Woollacott and Smith told CRN that the senior managers they spoke to at the Citrix Industry Analyst Meeting at the company's West Coast headquarters in Santa Clara, Calif., appear to be focused entirely on divesting from underperforming or tangential product lines.

Elliott, led by Portfolio Manager Jesse Cohn, laid out a makeover plan when it revealed its stake in the company to the SEC in June and, so far, has gotten much of what it wanted, including a seat on the board for Cohn, and the departure of longtime Citrix CEO Mark Templeton.

Cohn has been aggressively pushing for Citrix to sell off assets that aren't aligned with core products, including the popular Go-To line of communication tools.

At the analyst event, Woollacott and Smith were briefed by David Jones, vice president for corporate communications and a longtime Citrix insider. The thinking at Citrix is more strategic than an outright acquisition, they told CRN.

"He was very frank and openly critical in acknowledging some of the strategies that hadn't worked as well as they hoped over the last seven years in terms of adding all these pieces to the portfolio," Woollacott said of the conversation with Jones. "They didn't have critical mass in adding some of those parts."

Selling the entire business to anyone, however, seemed the furthest thing from the minds of Citrix executives, Smith told CRN.

Jones and other leaders, according to the TBR analysts, want to see Citrix focus on its flagship Xen line of products: XenApp, XenDesktop, XenMobile.

"The information I received is they are looking to divest themselves of some of the noncore assets," Woollacott said. "Then they intend to build better adjacent products going forward."

The key to that strategy will be the Citrix Workspace Cloud, a new cloud management platform Woollacott described as "Citrix 2.0."

Another sign that a wholesale acquisition isn't in the planning stages is a new emphasis on revamping the company's channel, which took a major step forward last week with the hiring of Kimberly Martin to take the reins of the partner program.

A deal with Dell doesn't make sense for other reasons -- TBR estimates 60 percent of the revenue in Dell's software portfolio comes from the Quest Software division it acquired a few years back, and many of Quest's legacy products overlap with what Citrix does, Smith said.

PUBLISHED SEPT. 24, 2015