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Technology Stocks : Citrix Systems (CTXS)
CTXS 103.900.0%Nov 2 5:00 PM EST
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To: NicholasC who wrote (5335)3/23/1998 8:52:00 AM
From: Roger A. Babb  Read Replies (3) of 9068
 
Nicholas, OK I will summarize my reasons for being short CTXS. Note that this is a minority view and everyone should make there own decision. Also my short position is hedged by longs in other high tech stocks so it is not exactly a "naked short".

1. The performance of Winframe (and probably its MSFT derivative) will not meet the expectations of customers for general office apps. There are special apps (such as reservation systems) where it works great, but the market for special apps is much smaller than general office use. Also not likely to see home use, another large market.

2. Competition is on the horizon. There is no barrier to entry for other remote control systems to hook up to HYDRA (such as PC Anywhere, etc.) and it is not clear that ICA has any particular advantage. Picasso does have advantages in very large installations and is not likely to have competition soon, but that market is limited.

3. Contrary to belief on this thread, Picasso is not required with HYDRA and, in my opinion, does not offer significant benefits except in large, multi-server, installations. The majority of HYDRA installations will not include Picasso.

4. The CTXS earnings reported over the last three quarters have been inflated by including money received from MSFT for the one-time sale of the Winframe technology as ordinary revenue when it was really an extraordinary item. The PE calculation should not include one-time asset sales.

5. Some of the larger CTXS resellers (NCDI is one) have announced sales slow downs as the market waits on HYDRA. This must be having some effect on CTXS revenues. I expect sequential revenues and earnings to be flat or declining for the first 3 quarters of 1998.

6. I do not expect significant revenues from ICA clients. The client side will remain near free to users.

The above is strictly my opinion, do your own research and make your own decisions. If revenues and earnings continue to increase that will be a signal that I am wrong.
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