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

To: puborectalis who wrote (8478)	6/16/2000 2:44:00 PM
From: Riskmgmt	Read Replies (1) \| Respond to of 9068

Stephen: Re: The key problem is not the earnings/business going forward but the loss of credibility with analysts,especially ML with regards to how the events of last week and Monday took place,allowing a deluge of sell orders BEFORE the company spoke up! That has been debated at length and is understandable. However, I am more interested in understanding the financial 's at present. Ray

To: puborectalis who wrote (8478)	6/17/2000 8:21:00 AM
From: Heeren Pathak	Read Replies (2) \| Respond to of 9068

Wow.... What a week to be out. I just caught up with all the posts. The Raging Bull post has to be the best post so far. In retrospect, the DSO numbers were a red flag. However, lets put this in perspective. The type of problem Citrix had is common in many fast growing companies. When a company is growing fast, they have the challenge of building their internal infrastructure to support the growth. What does this mean... 1) They need to hire enough people and make sure those people have the right skills. Sometimes this means passing up internal people who want a promotion and hiring a top-level person from the outside. Common mistakes that occur here are the either promote or hire the wrong person. 2) They need to invent new processes. The most efficient way to run a 100 person business is different than a 500, 1000, or 2000 person business. Putting the process and IS systems in place as the business grows a challenge to begin with. However, recognizing when the current processes aren't sufficient is even a bigger challenge. There are a number of companies that lost track of their internal management. In fact, Oracle was a one of these just a few years ago when they had some serious revenue misses. I seem to recall the press were questioning Larry Ellison's leadership and whether he is spending too much time being a celebrity, etc. I don't think anyone will have that criticism now. I suspect that Citrix's internal systems robust enough for the senior management team to properly track what was going on. This caused a delay in them recognizing there was a problem and the delay caused the magnitude of the problem to become quite large. 3) As revenue sales up, it becomes increasingly difficult to make the growth numbers without bigger deals. This invariably forces a company to move towards enterprise accounts. Enterprise sales do take longer and are more complex. Smart companies start developing enterprise account sales strategy slowing, giving them time to learn. Other companies keep taking the smaller revenue chucks until they are forced not to and then try to switch to the enterprise sales. Citrix management stated this as one reason for their problems. However, I suspect the real problem is they have issues with point 1 & 2. Enterprise sales requires a different type of sales person (and sometimes sales structure) than smaller licensed sales. It also requires a different approach in terms of the sales process in terms how how you make the sale, how you forcast these sales, how contracts are written, etc. I suspect that Citrix probably doesn't have the right people in the sales organization and probably doesn't have a good general process in place. When they recognized that the smaller sales currently in the channel would not let them make there revenue numbers, they focused their sales team on enterprise sales since only a few enterprise sales are needed to make a large revenue jump. What does this mean going forward? Well, I don't think we are necessarily out of the woods yet. There are several areas of risk that still exist. 1) It would surprise me if Citrix did not do some internal sales reorganization. I am sure they need it. Of course, any organization change bring with it chaos. When an organizational change is made during a time of crisis, it can also create morale problems. Both in turn can have a short-term, large, negative impact on the sales team. Considering the magnitude of the shortfall, it is possible that Citrix has already done this reorganization. If so, that would be a positive thing. If not, I would believe that we may have another rough quarter or two ahead of us. 2) As the RB article stated, the loss of confidence and credibility will be another challenge. Analyst don't mind guiding things down slowly, but they don't like losing face to their clients. It will take time to recover this back and that means the stock is not likely to recover quickly. 3) One of the posts stated that the CFO hinted that he had 32 million in assets to play with. This is of concern to me since the best thing the company can do is take its lumps now. I would hope that the earning shortfall has a bunch of one time charges in it where they writeoff everything they can and be conservative about how they rampup their revenue. The market will NOT punish them for over-delivering. However, (as we have seen) the market irrationally punish ANYONE who misses a target. So what does a shareholder to now? Well, it depends on when you bought and what your investment time horizon is. If you bought over a year ago, Citrix is still giving you a healthy profit. If not, you are taking a heathly loss. Either has tax implications that need to be considered. The expectation of a quick recovery is unlikely. I wouldn't expect to see any significant, sustained recover in the price of the stock until late this year and (more likely) early next year. While this may seem to be a long time, it will take 2-3 quarters of good growth and accurate guidance for Citrix to prove to the investment community that it has things back on track. If your investment horizon goes out that far, Citrix could an excellent, but speculative investment at current prices. However, if you don't want to stomach the downside risk, get out. I can easily see this puppy moving and staying in the teen over the summer months, possibly until Q3 numbers are announced. The one bright note is that I still believe the companies technology has a lot of legs and the market for it is no where near saturated. Therefore, strong revenue growth is still possible. Personally, I had gotten in early enough and am deversified enough that I am most likely going to ride this one out. I will probably increase my holding, but not until I get a better sense that they company seems to be back on track. Heeren

To: puborectalis who wrote (8478)	6/21/2000 1:46:00 AM
From: Cogito	Respond to of 9068

Stephen - I don't know how many software companies the person who wrote the analysis you quoted has run. I'm sure he or she is a very intelligent person, but at least one of the statements in that post makes me question his or her thinking. The company should have "b) Immediately acquired a few top notch high level sales reps who had not only worked at the CIO level, but were superstars at that level". Where does this person get the idea that it is remotely possible to immediately acquire such people? Superstar salespeople aren't usually sitting around at home waiting for the phone to ring, wondering how soon they can start a new job. Sheesh. It usually takes at least several weeks to locate, recruit and hire the very best people in any field. Certainly the current technology job market makes it orders of magnitude more difficult for Citrix to hire anyone, let alone the very best salespeople in the world. Then, after hiring these "superstars" overnight, the company was supposed to bring all their other salespeople up to a higher level by having the new hotshots train them? What about getting these new salespeople trained in what MetaFrame does and how it fits into an enterprise network? In my opinion, these ideas are not those of a person who has much of an idea how these things work. Personally, I don't see the value of discussions about what anyone "should have done" in any situation. Sure, we can learn from mistakes by contemplating what we COULD have done, but I believe the people who are in a position to benefit from such contemplation probably aren't reading this thread. Moreover, they know a lot more about what is actually going on at Citrix than any of us do. It remains to be seen what the company will do next, but I for one will hold on and find out, just as I did in 1997. I only regret that now, as I did back then, I find myself without the cash to capitalize on this situation. (Oh well. At least our newly remodeled bathroom is nice.) - Allen PS: Having just re-read your post, I see that you were the person who made all of those statements. Rather than editing my entire post, I'll just append this. I will say that you did make many valid points within that post, but I still believe that you must be quite naiive in many ways. I think you may be well assured that if it were as easy as you make it out to be to do all of the things you suggest, we wouldn't be sitting here discussing this.