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Citrix's Revamp Plan to Ramp up Business Profile and Growth

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Citrix Systems, Inc. has announced a restructuring program in a bid to expedite the transformation to a cloud-based subscription business, increase strategic focus as well as improve operational efficiency.

The program will witness removal of some full-time positions and consolidation of facilities.. However, layoffs outside the United States will be subject to local law and consultation requirements.

The company expects to incur around $60-$100 million pre-tax restructuring charges from the program. The same is inclusive of roughly $55-$70 million related to employee severance costs and around $5-$30 million, associated with consolidation of leased facilities and other expenses pertaining to the plan. The company hopes to complete most the restructuring activities during fourth-quarter 2017 and fiscal 2018.

Notably, Citrix has been struggling on the bottom-line front for quite some time now. Apart from other headwinds limiting the bottom-line growth, frequent management changes at the company do not seem to bode well as far as investors’ confidence in the stock is concerned.

Very recently, Citrix  announced appointment of Mark J. Ferrer as Executive Vice President and Chief Revenue Officer. In addition, the company reported a change in board composition by roping in Dr. Ajei S. Gopal. Gopal is the President and CEO of ANSYS Inc. (ANSS - Free Report) .

Additionally, Citrix has been making frequent changes to the designation of CEO. Earlier in July, the company had appointed David J. Henshall as new President and CEO, thus recruiting four CEOs in a row in less than two years.

Such recurrent management changes apart, Citrix’s bottom line has been hurt by considerable steep costs. Declining revenues from products and licenses also throw a severe challenge to the company.  

In light of Citrix’s cost-cutting and restructuring efforts, it remains to be seen whether its actions increase profitability and find favor with shareholders.

 

Zacks Rank & Key Picks

Citrix currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Computer and Technology sector are Progress Software Corporation (PRGS - Free Report) and Adobe Systems Incorporated (ADBE - Free Report) . While Progress Software sports a Zacks Rank #1 (Strong Buy), Adobe Systems carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Progress Software and Adobe Systems have surged 42.6% and 36% respectively, in a year.

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