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Technology Stocks : Citrix Systems (CTXS) -- Ignore unavailable to you. Want to Upgrade?

To: Cooters who wrote (7287)	11/26/1999 12:23:00 PM
From: jkb	Read Replies (1) \| Respond to of 9068

This is an interesting article - I am particularly pleased with Citrix's decision to license WinFrame/MetaFrame to ASP's on a monthly basis - as opposed to a one-time purchase - which is how they price it to distributors. That truly is to their benefit - and an area I was concerned about. Note comments in bold below: ________ WSRN's Company of the Week Citrix Systems, Inc. (NASD : CTXS) Sponsored by: Company Links \| Research Reports \| Register NOW! \| Stock Chat \| Free Research This week's Company of the Week is Citrix Systems, Inc. (NASDAQ: CTXS $93). Founded in 1989, Citrix Systems is a world leader in system software for server-based computing. CTXS' technology gives organizations the independence, speed and flexibility needed to extend any application to anyone, anywhere. The Company develops, markets, sells and supports innovative client and server-based computing software that enables effective and efficient deployment of enterprise applications that are designed for Microsoft Windows(R) operating systems. The Company's MetaFrame(TM) and WinFrame(R) product lines permit organizations to deploy Windows applications without regard to location, network connection, or type of client hardware platforms. The Company began shipping its WinFrame product in the third quarter of 1995 and its MetaFrame product in the second quarter of 1998. Citrix products reduce costs. The costs of maintaining and upgrading software are enormous, including the cost of personnel to develop, acquire, maintain and update applications as well as to provide ongoing technical support. One study suggests that these costs can be reduced by as much as 65% using a Citrix type architecture. So it shouldn't be surprising that over the past five years Citrix' sales have grown at an average annual rate of 125% while profits increased 369% on average. Revenues for the year ended December, 1998 were $248 million. In the September, 1999 quarter, revenues rose 56% to 106 million while net income increased 52% to $0.35 per share. The basic thrust behind Citrix growth has been its ability to enable its customers to overcome technology churn and to cost-effectively deploy and manage business applications. And this was before the web. Last July, CTXS acquired ViewSoft, Inc., a firm specializing in software for multi-tier, Web-based application development and deployment. The company has begun to leverage this technology to build its leadership in the rapidly growing market for deploying and managing Web-based applications. In theory, it shouldn't be too difficult for someone to put up a copy of an application and enable users to access it. But the reality is that a properly constructed architecture takes up very little overhead and does not require high speed connections. Citrix solution is to have 100% of the application execute on the server. The result is that the applications consume as little as one-tenth of their normal network bandwidth. So the reality is that Application Service Providers (ASP's) need CTXS. Earlier this month, the company announced that fourteen ASPs have agreed to use Citrix' application-server software, an essential enabling technology for the ASP market, under a pay-per-user licensing arrangement. Fees from the new licensing program -- which is attractive to ASP's because it does not require an up-front license fee -- are estimated to run $8-$15 per user per month, depending on volume. With intranets connecting possibly 400 million desktops and non-PC devices by 2002, the market could easily be $2 billion -- not bad for a company with estimated revenues this year of $400 million. Earlier this year, CTXS floated $310 million in convertible debentures, and now has about $360 million in long term obligations against $449 million in equity. But the money hasn't been deployed, with the company sitting on about $694 million in cash and investments. While Citrix appears to be the leader in supplying infrastructure to ASP's, technology changes rapidly, and there is no assurance that the company will be a survivor. So, too, must investors consider CTXS's near sole reliance on Microsoft currently. While the two companies have coexisted well so far, there is no assurance that this will continue when the current contract runs out. Finally, investors should consider that the stock has risen three fold from its low this year, 18% in the last week alone. Based on estimates of $1.34 per share for 1999 and $1.69 per share for 2000, CTXS sells for a lofty 69x estimated earnings. Is CTXS a buy, sell or hold? With WSRN's data center, BASELINE reports and extensive links you should have what you need to make an informed decision.