Citrix had a good Q4 but plans to cut staff by 10 percent
Whether virtualization is 'recession proof' or not, these companies are doing what it takes to prepare for an uncertain 2009
Under the reign of Diane Greene as the CEO of VMware, virtualization software was thought of as a "recession proof" technology. And while it has proven to be a cost-saving technology over the years, perhaps calling it recession proof in today's troubling economic downturn is a bit much.
Citrix recently announced their fourth-quarter and end-of-year financial results. Overall, the company's revenue in Q4 increased from $400M in fiscal 2007 to $416M in 2008. For the fiscal year 2008, Citrix reported annual revenues of $1.58 billion, compared to $1.39 billion in the previous year, a 14 percent increase.
However, the application delivery specialists also reported net income for the fourth quarter of fiscal 2008 fell to $60 million compared to $63 million for the fourth quarter of 2007. And annual net income for 2008 was $178 million compared to $214 million in fiscal 2007.
"I'm pleased with our Q4 results and performance for 2008 –- especially in the face of an extraordinary worldwide environment," said Mark Templeton, Citrix president and chief executive officer. "While being fiscally cautious, we are more confident than ever in our vision and business strategy. Citrix products have a long track record of reducing IT costs, while simplifying enterprise computing –- exactly what customers need."
Citrix saw a slight decline in part of its virtualization business. BetweenXenApp, XenDesktop, and XenServer, only XenApp saw a fall in sales in Q4 compared with the same time last year. But the company's reliance on XenApp will gradually decline as the company's diversified product lines take hold.
During its financial announcement, Citrix also stated that it was starting a "restructuring program" and taking steps to reduce its headcount by approximately 10 percent or almost 500 staff members of the company's global workforce.
The Citrix announcement of staff reductions comes on the heels of virtualization competitor Microsoft announcing its own layoffs -- amounting to 5,000 jobs, or 5 percent of its global workforce headcount.
The giant in the virtualization space, VMware, didn't mention anything about job layoffs in its EOY financial reports; however, the company did say something about a hiring freeze despite the fact that it still shows nearly 150 job openings on their corporate Web site.
All three companies are closely watching the economy in 2009. Citrix said they were projecting revenue to be down in its first quarter of 2009 by 5 percent and flat for the year as a whole based on current expectations. So whether virtualization is considered "recession proof" or not, it sounds like these companies are doing what it takes to prepare for an uncertain 2009.
Posted by David Marshall on February 2, 2009 06:19 AM
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