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Yesterday, leading cloud computing solutions provider Citrix Systems Inc. (CTXS - Analyst Report) declared a disappointing forecast for the third quarter of 2013, which ended on Sep 30. As a result, in the after market trade on NASDAQ, the share price of Citrix was down $8.72 (13.08%) to $57.94. Citrix currently has a Zacks Rank #3 (Hold).

The company stated that its third-quarter 2013 total revenue will be within the range of $710-$712 million, significantly below its earlier guidance of $730-$740 million and also below the current Zacks Consensus Estimate of $737 million.

GAAP earnings per share (EPS) are expected to be 39 cents to 40 cents compared with the prior guidance of 41 cents to 42 cents. Non-GAAP EPS are expected to be 68 cents to 69 cents against the prior estimation of 72 cents to 73 cents. Including 26 cents of stock-based compensation expense, the non-GAAP EPS of 46.5 cents is well below the current Zacks Consensus Estimate of 53 cents.  

Citrix cited reduction in IT spending and delay in securing large orders as the primary reasons for this tepid guidance. The broader infrastructure software manufacturing industry is going through a volatile phase. The global economy is still suffering from fluctuations and we are not completely out of woods. Various geo-political concerns in the European and African countries have slowed the momentum of economic recovery.

In the last month, Oracle Corp. (ORCL - Analyst Report) and Red Hat Inc. (RHT - Snapshot Report) provided near-term weak financial guidance. Citrix’s closest competitor VMware Inc. (VMW - Snapshot Report) is also facing market fluctuations.

At present, Citrix is facing two pronged problems (1) continuation of global macroeconomic headwinds is slowing the momentum of new license sales and (2) growing demand for tablets instead of PCs or notebooks. This scenario may further jeopardize Citrix’s long-term financial results.  

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