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Time for Citrix resellers to start seeing double

Citrix has become the latest vendor to announce plans to split the business as part of plans to increase focus on the core parts of the business

It would appear that what Elliott Management Group wants, Elliott Management Group gets, as Citrix announces that it will be the latest technology heavyweight to split.

The beleaguered virtualisation giant announced that it is to spin off some of its most prized technologies, including the GoTo family of solutions, into a new publicly traded company. Citrix also said that it plans to axe around 1,000 full time staff.

Earlier this year, Elliott Management revealed that it held a 7.1% stake in Citrix and that it planned on applying the aggressive pressure for which it has become so famous.

While the activist investor didn’t publicly suggest the split, it sent an open letter to the board calling for major reforms.

“We would be remiss if we failed to note that, to date and as recently as last month, [Citrix Systems] has repeatedly resisted public calls for real change from the broader investment community,” the letter read. “We hope that the Company can move on from that position and work together with us to realise the profound opportunity to create value that is undeniably before us. Elliott is prepared to push for change directly, but the far better course is for Citrix to embrace this offer of cooperation and for us to proceed collaboratively, and quickly, together.”

The GoTo family of products, which includes GoToAssist, GoToMeeting, and GoToMyPC, will become a standalone business, with the split happening at some stage in the second half of 2016. Citrix will then focus on its Xen virtualization suite and the NetScaler and ShareFile product lines.

“Upon review, it is clear to us that the GoTo family of products is best suited to grow and operate as a standalone business,” said Citrix’s interim CEO Bob Calderoni.

Chris Hylen, currently VP of Citrix Mobility Apps, will assume the role of CEO for the new company.

Citrix also said that the restructuring would see 1,000 job cuts, representing about one ninth of its total workforce. The firm didn’t go into too much detail, but said that the cuts would most likely come from ‘marketing, general and administration areas’ of the business.

The announcement of the major restructuring comes only weeks after a significant channel restructuring. In September, Kimberly Martin was announced as the new vice president of partner strategy and sales, while Microsoft veteran Sherif Seddik was appointed the managing director and VP for EMEA.

While Elliott Management’s approach is heavy-handed, more often than not, its tactics are based on sound reasoning. Citrix has struggled to juggle its various technologies in a rapidly evolving industry and the split may well give each of the new businesses the sense of focus needed to remain competitive.

“Citrix joins a line of organisations who are splitting in two as they try to adjust to the faster paced technology environment and identify where their best opportunities lie,” said analyst Angela Eager of TechMarketView. “In this environment, where the pace of product development is constantly accelerating, any weaknesses are amplified.”

Citrix shares were down 7.18% at the time of writing at $72.82 at the time of writing.​

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