Citrix says it will cut 1,000 jobs and spin off its GoTo business in an announcement that follows criticism from a major investor. The company calls it an effort to simplify operations and “[focus] on our core strengths.”
The “elimination” of 1,000 full-time workers and contractors is part of Citrix’s plan to save $200 million. Most of the layoffs will occur this month and in January. The 1,000 number doesn’t take into account the employees that will be departing for the GoTo spinoff.
The spinoff – expected to wrap in the second half of 2016 – would create a publicly traded company in which Citrix shareholders would own shares. Citrix explained in a news release that spinning off the business was a tax-free way to adopt “more quickly to the SaaS market.”
“This separation will create a leading, pure-play SaaS company that will have a targeted focus with the flexibility to invest in its portfolio of products,” Citrix CEO Bob Calderoni said. “It will also allow Citrix to refocus and amplify investment in our core mission to enable secure and reliable delivery of apps and data for the modern enterprise. We look forward to a seamless transition for our employees, customers, partners and other key stakeholders.”
Programs in the GoTo family include GoToAssist, GoToMeeting, Grasshopper and OpenVoice. Citrix has tapped Chris Hylen – senior vice president of the Citrix Mobility Apps Business Unit – as CEO of the yet-to-be-named company.
“We are building on a strong base of offerings and look forward to creating even more value for our employees, customers and shareholders,” Hylen said.
Citrix said it will be increasing its emphasis on “core enterprise products for secure and reliable application and data delivery,” with examples including XenApp, XenDesktop and NetScaler.
Citrix has faced pressure this year to increase its margins.
Elliot Management Corp., a shareholder accounting for 7.1 percent of Citrix, criticized the company in an open letter in June. The investor praised some of Citrix’s products but pointed to operational expenses that “outpace revenues.”
“Citrix’s cost structure is the result of years of layered complexity and expenses. The structure has become highly inefficient in terms of actual cost and is also ineffective at generating revenue growth,” the letter read.
Three major points of weakness, according to Elliot, were underperforming sales and marketing; overly speculative research and development; and several distracting product lines.
Elliot said Citrix’s channel efforts were “stretched across too many channel partners” and directed to “sub-scale partners.”
“We are confident all of these issues are fixable through a full realignment to implement best practices in the areas of deal team composition, sales management span of control, channel management and compensation structure,” the letter read.