Citrix Systems plans to cut 900 positions -- 700 full-time and 200 contractors -- and will also consolidate some of its less popular products to improve efficiency, the virtualization vendor revealed on its fourth-quarter earnings call.
"I'm proud of how we addressed market, transitional and competitive challenges in 2014, but I'm not satisfied," Citrix Systems Inc. (Nasdaq: CTXS) CEO Mark Templeton said on the earnings call Wednesday afternoon. (See Citrix Lays Off 900 as Annual Income Declines.)
The restructuring, down from Citrix's current 9,800 employees, is designed to allow the company to focus its investments in mobile apps, including data sharing and collaboration, and to develop areas like mobility, networking, Workspace Cloud and its application delivery product NetScaler.
In terms of product consolidation, Citrix is integrating AppDNA, for physical-to-virtual conversion of Windows spaces, into the XenApp Platinum and XenDesktop Platinum products. Templeton said it plans to replace its Virtual Desktop Infrastructure (VDI)-in-a-Box with a "simpler and more price competitive version," following its recent acquisition of desktop virtualization vendor Sanbolic. (See Citrix Acquires Sanbolic to Improve Desktop Virtualization.)
The overall goal is to have fewer brands, "and that means turning some products into features and the elimination of some, especially the smaller-volume products," Templeton said.
Citrix is looking to the restructuring to reduce the rate of growth of expenses, while focusing resources on strategic areas, David Henshall, Citrix COO and CFO, added on the call.
The company expects a pretax charge of $50 million to $55 million in connection with the restructuring, with annualized pretax savings of $90 million to $100 million.
Citrix reported annual revenue of $3.14 billion in 2014, up 8% from $2.92 billion the previous near. Annual net income was $252 million, or $1.47 per diluted share, down significantly from $340 million or $1.80 per diluted share in 2013.
Revenue for the fourth quarter of 2014 was $851 million, up 6% year-over-year from $802 million. Net quarterly income was $95 million or $0.58 per diluted share, compared with $139 million or $0.74 per diluted share for the previous year's quarter.
Software defined infrastructure was a "standout" for the company despite its lower income, growing 25% and now accounting for nearly 20% of Citrix's overall mix, Henshall said.
Workplace Suite, which combines mobility, app virtualization and secure data, has performed well since its recent release, the company said. The suite generated 13 transactions of $1 million or more in the fourth quarter, of a total 90 $1-million-plus transactions the company did in that period.
Service providers also accounted for nearly 50% year-over-year growth in Citrix's subscription-based Workspace Services program, a pace the company expects to continue into this year.
NetScaler saw strong growth as well. Virtual appliances did well, although traditional ADC is becoming "price sensitive," with "units growing faster than bookings," Henshall said. (See Citrix Upgrades Its ADC for Mobile Apps.)
Look to WAN virtualization developments from Citrix in the second half of 2015, Henshall said.
Citrix recently made several appointments of top executives, including Carlos Sartorius, senior vice president for worldwide sales and services; Robson Grieve, senior vice president for marketing; and Geir Ramleth, senior vice president and chief strategy officer.