Citrix takes a whack on Wall Street

Citrix' share price fell 46 per cent yesterday on fire-sale volume, after it lowered expectations for its quarter ending 30 June. Revenue is expected to be $105-110 for the quarter, compared with $94 million a year ago, but earnings per share are forecast at 9-11 cents, compared with 16 cents a year earlier.

The reasons, Citrix said, were that the company was moving from shrink-wrap to licensing, but had discovered it took longer to close licensing sales, resulting in revenue coming in more slowly, and excess inventory in the channel. It must have seemed like a good moment to unburden another problem as well: Asian sales were lower than expected. Citrix portrayed the situation as a one-off correction.

There were however some suspicious circumstances. Financial analysts may have punished Citrix because its CFO John Cunningham sent an assistant to a PaineWebber conference last week, which some suggest resulted in a theory that Citrix had something to hide. It is not inconceivable that Citrix was hammered by the financial establishment because it had sent a sub, because its shares fell sharply last Thursday to $51 from around $62, with double the usual volume.

There was a side suggestion that the Microsoft ruling had pushed down Citrix shares, but even assuming gross ignorance on Wall Street, the idea is not really credible. Citrix gets around 10 per cent of its revenue from Microsoft licensing.

Citrix comfortably beat the Street with its last quarter, which was around 50 per cent up on a year-earlier. In March Citrix shares had peaked at $122 in the over-heated market, but suffered more than most during the market correction. Last week AG Edwards had a 12-month target of $130 for Citrix. That looks a bit optimistic as they closed yesterday at $22. ®