Citrix For Sale?

Every few months, rumors spin that Citrix is up for sale. However, last week, Bloomberg Technology reported that Citrix Is Working with Goldman Sachs on Potential Sale Process. What could this mean for Citrix and its technology?

Over the past year, Citrix has sharpened its focus and stopped its hemorrhaging. Its products have improved dramatically, employee morale has taken a major upswing, and its stock has climbed 30%. Kirill Taratinov has introduced many changes to which these positive strides can be directly attributed.

There is a wild card behind the scenes, however, and that is Elliott Management. With representation on Citrix’s board of directors, Elliott has direct control and input regarding the company’s future. And Elliott Management rarely loses.

With the GoToMeeting spinoff and rationalization of some less-than-stellar products, the company is focused on virtualization and teaming with Microsoft. But is that friendship with Microsoft on the cusp of becoming more intimate?

Citrix: All or Some?

The Bloomberg report was not clear whether Goldman Sachs was seeking an acquirer for all of Citrix or just part of it. The report highlighted that Citrix’s market value increased over the past year and that the price would understandably be extremely high.

If Citrix is indeed for sale in its entirety, there is a short list of companies that have deep enough pockets to pay the high price. The short list could include Microsoft, Cisco, and perhaps IBM. Of these, IBM is not well aligned for this, but just a few short years ago, the concept of Dell acquiring VMware was a long shot, too.

Cisco could be a potential acquirer. Not only does NetScaler align well with Cisco’s key product set, but Cisco’s endeavor to expand beyond just being a network company could be realized instantly by adding application and desktop virtualization market leadership. Rumors of a Cisco acquisition have been negated over the years because of Cisco’s WebEx product and Citrix’s GoToMeeting product, but with the recent sell-off of GoToMeeting, that product overlap doesn’t exist anymore.

And then there’s Microsoft. Citrix and Microsoft certainly have become chummy over the last couple of years. These companies’ joint offerings have peppered numerous marketing announcements, and the two are obviously well aligned. Perhaps this is a precursor to an acquisition?

Would Microsoft really need to acquire Citrix in order to win the virtualization and cloud challenge? More than likely, a tight relationship would be sufficient. As long as Microsoft stays very close to Citrix and wards off other potential acquirers, a tight relationship provides Microsoft the best of both worlds. Further, an acquisition might or might not be approved by the regulatory bodies, because a combined entity would have such strong market share.

Perhaps Citrix is only seeking to sell off a portion of the company. Think about the recent sale of the GoTo product line: it included a similar process and affected only a part of Citrix. Rumors had surfaced in mid- to late 2015 that Citrix was up for sale, and the result was the GoTo sale that finally culminated early in 2017. GoToMeeting was an excellent collaboration product, but it didn’t align well with the rest of Citrix, so selling off that subsidiary so that Citrix could focus on its core competencies was a logical move.

If only a portion of Citrix were to be sold off, what might it be? Certainly, Citrix has numerous technologies that it has either developed or acquired over the years that just don’t fit in with the strategic objectives. It would be logical to sell off one or more of these smaller acquisitions, such as Sanbolic or Podio, that might otherwise just die a slow death.

In the same 2015 time frame, when discussions about selling off the GoTo products started, speculation arose regarding doing the same for NetScaler. If the latest round of discussions relative to a sell-off are indeed focused on NetScaler, this may be concerning from a technical standpoint.

NetScaler is uniquely positioned as the gateway product for XenApp/XenDesktop. This means that it provides security and insight to the back-end Citrix infrastructure, and it is able to do so in unique ways because of tight product integration. There may be some business logic in selling NetScaler to Cisco, but from the standpoint of the gateway functionality that supports XenApp/XenDesktop, it would be seen by the technical community as selling off part of the core business.

Citrix has made some painful changes in the past year and is on a positive trajectory from the standpoint of its people and products. While shareholder value is certainly an important aspect of the business, seeking short-term gain by selling NetScaler would be done at the expense of long-term holistic value.

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