Citrix to Spin Off Business, Cut Jobs
Citrix Systems Inc. said it planned to spin off a business into a new public company and slash costs, months after activist investor Elliott Management Corp. called for change at the software firm.
Citrix said it would spin off its GoTo business, which includes the GoTo Meeting software that allows users to connect to business meetings from many devices.
It also noted that it would restructure its labor force, focus on its core business and optimize operations and resources. The company said it expects to cut about 1,000 full-time and contract jobs, mostly this month and in January 2016, excluding the effect of spinning off the GoTo business.
"We are simplifying our business in all areas -- product, marketing, sales, operations and development," said interim Chief Executive Bob Calderoni in a news release.
Shares of Citrix declined 2.4% in after-hours trade.
In January, Citrix had announced a restructuring program by which it would cut more than 700 jobs. At the time, the company said it expected to save $90 million to $100 million.
In June, Elliott Management, a specialist when it comes to activism in technology companies, zeroed in on the company, saying it should slim down by selling assets and cutting costs. At the time, it suggested Citrix could sell or spin off some of its businesses, among other options.
Citrix said the moves are expected to save it about $200 million a year before tax, with most of that realized by fiscal 2016. It expects to book $65 million to $85 million of severance-related charges in the fourth quarter.
The company also forecast its next year of profit, saying it expects adjusted earnings per share to range from $4.40 to $4.50. Analysts polled by Thomson Reuters had expected $4.20 a share of adjusted earnings.
Citrix makes workplace software that allows employees to work from their own desktops or mobile devices off a centralized data center, which is known as virtualization.
By Nathan Becker