How funny!
I haven't logged into this account in ages. I read your first post today and logged out of my admin account and into this one and wrote a long-winded reply. But I decided to cancel it cancel it before posting, and then your second post appeared in my Inbox. So, here goes again:
I still think Citrix is a great company with excellent products and massive adoption as you pointed out in your post. There is hardly a major domestic company that doesn't use Citrix somewhere in their enterprise, and Citrix's efforts to penetrate further into the enterprise are making consistent progress. They are also making excellent progress in their foreign penetration as well as into vertical markets, most especially government and health-care.
They are machine when it comes to growing revenues and generating cash. Likewise, management is like a vacuum cleaner sucking up that cash through their various and sometimes ill-planned third-party repurchase agreements and open-market buybacks (most of that dates back to when Cunningham was CFO). A good portion of the buybacks serve only to cover the very generous option grant programs for management and employees. And then there are the acquisitions; some have paid off, other did not.
I personally made a lot of money on Citrix over the years and I've lost a lot as well, both investing and trading. The past few years, CTXS has been a trader's stock. None of their gains in revenues, net income, and EPS have benefited the common shareholders. The stock has remained in a relatively narrow range sans dividend. I dare say management has done better in terms of ROI.
I haven't been following the competition much since they never amounted to much more than ankle biters. I seem to recall that upstart New Moon was purchased by Tarantella, and recently read that Tarantella was or is in the process of being purchased by Sun in a take-under. I don't see that helping Tarantella's relationship with Microsoft, which was never on par with that of Citrix. (Which reminds me... according to the "Linux on every desktop" crowd, none of us should be using Windows desktops much less servers anymore. <g>)
Citrix has always had an unparalleled relationship with Microsoft, except for that short but painful period in the '90's when Jim Allchin was feeling his oats and all but extorted Citrix's source code from them. The powers that be at Microsoft have since made sure that Citrix has remained well-positioned to front-run Microsoft's in-house server development cycle by 2-3 years, and there is no reason to expect that to end.
It would be nice to see some of the gains in financial performance percolate through to the share price. After so many years of not seeing that happen, I'll remain skeptical until it actually does occur... and stick.
I will opine that there's better upside than downside potential at this valuation. |
