January 23, 2008 / 10:44 PM / 10 years ago

UPDATE 1-Citrix Systems Q4 earnings rise

(Recasts; adds background, share movement, analyst comment)

By Purwa Naveen Raman

BANGALORE, Jan 23 (Reuters) - Infrastructure software maker Citrix Systems Inc (CTXS.O) reported a 31 percent jump in quarterly profit before charges that beat Wall Street’s view, and authorized the buyback of up to $300 million shares, sending shares up more than 5 percent in trading after hours.

Excluding items, fourth-quarter net income rose to $95 million, or 49 cents a share, from $72 million, or 39 cents a share, a year ago. Revenue rose 24 percent to $400 million.

Analysts on average had expected the company to earn 43 cents a share, excluding items, on revenue of $380.7 million, according to Reuters Estimates.

For the first quarter, the Fort Lauderdale, Florida-based company expects earnings of 33 cents a share to 35 cents a share, excluding items, on revenue of $$367 million to $377 million. Analysts expect earnings of 35 cents a share, before items, on revenue of $368 million.

Citrix’s stock has risen more about 25 percent since the start of 2007, spurred by strong quarterly results and a bright outlook for virtualization technology developed by the company.

Virtualization is a software technology that boosts the efficiency of computers by allowing one machine to perform the work of several.


Citrix acquired XenSource Inc in August, 2007, to make its presence felt in the server virtualization market. The company also has a foothold in the desktop virtualization market.

The company on Tuesday further expanded a partnership with Microsoft Corp (MSFT.O) under which the two companies develop virtualization technology.

“The industry experts say that the penetration (of virtualization technology) is below 10 percent, so there are lots of opportunities for companies like VMware (VMW.N), Microsoft and others,” Lazard Capital Markets analyst Joel Fishbein said by phone on Tuesday.

The world’s largest software maker Microsoft is wrestling VMware Inc, an affiliate of data storage firm EMC Corp EMC.N, to gain a firmer foothold in the virtualization market.

VMware currently holds the upper hand with a 70 percent market share and had recently agreed to acquire privately held Thinstall to expand its desktop virtualization capabilities.

On the other hand, Microsoft’s attempt to gain dominance in virtualization market has also stoked rumours that it might eventually buy Citrix, which is both its competitor and partner.

“I think right now we have got a pretty fragmented market in terms of different solutions and what we see is that Microsoft and VMware will continue to consolidate the space,” Fishbein said.

Shares of the company were up more than 5 percent at $33.70 in trading after hours. Citrix shares closed down almost 3 percent at $32 Wednesday, after falling as much as 10 percent to $29.60 earlier on the Nasdaq. (Editing by Pratish Narayanan)

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