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Citrix Systems President and CEO Mark Templeton plans to retire and officials will review what to do with the vendor’s GoTo online collaboration portfolio as activist investor Elliott Management grows its influence over the company.
The company also is making changes on the board of directors, including appointing Jesse Cohn, senior portfolio manager at Elliott, as an independent member. In addition, Citrix officials will search for another independent board member who is agreeable to Elliott and who will replace another board member when appointed.
Templeton will stay on as president and CEO and as a director until a replacement is found. The company’s board has begun a CEO search, including hiring an executive search firm, Heidrick and Struggles.
The moves were made public July 28 as company executives announced second-quarter financial numbers, which included a 2 percent year-to-year growth in revenue, hitting $797 million, and net income of $103 million, almost doubling the $53 million from the same period last year.
Citrix is one of a growing number of tech vendors that are in the crosshairs of Elliott Management, which has pushed some companies like EMC, Juniper Networks and Riverbed Technology to streamline operations, reduce costs and shed businesses to improve their overall financial standings and return more money to shareholders.
Over the past couple of years, Elliott has bought enough stock in these companies to become among their top independent investors, and then has leveraged that position to influence the direction of the companies. Riverbed eventually was sold to equity firms after executives instituted a cost-reduction plan, while Juniper officials last year instituted a restructuring plan that included a lot of the moves recommended by Elliott, including slashing costs, reducing R&D spending and returning $3 billion to shareholders.
Elliott officials also have pushed EMC officials to get rid of VMware and change its federation business model, though CEO Joe Tucci has pushed back at the suggestions. However, EMC officials in January appointed two board members who were approved by Elliott, and last week said they plan to cut $850 million in annual expenses starting in 2017. The board also reportedly is beginning the search for Tucci’s replacement.
Elliott owns about 7.5 percent of Citrix’s common stock.
“We first invested in Citrix because we saw a substantial value creation opportunity for the company and its shareholders,” Cohn said in a statement. “We are confident that the initiatives announced today and the addition of new directors to the company’s board will allow Citrix to build upon its position as an innovative industry leader, and to drive significant shareholder value.”
According to CEO Templeton, Citrix’s solid second-quarter numbers are the result of changes that were put in place months ago.
“We are starting to see the benefits of the restructuring actions we took at the start of 2015 in terms of margin expansion,” Templeton said in a statement. “Through the additional actions we are announcing today, we’re taking steps to ensure that we are focusing all of our energy on our core secure app delivery offerings and setting the company up for even better execution, greater efficiency and profitable growth.”
Among those additional actions are creating a committee among board members that will work with Templeton and other executives as they review Citrix’s operations and finances to complement the simplification efforts that launched earlier this year and were aimed at improving profit margins. The board’s Operations Committee will be headed by board member Robert Calderoni, who also was named executive board chairman.
Citrix officials also will develop options for its GoTo family of products, which includes GoToMeeting online conferencing offering, GoToTraining for online training, GoToMyPC for enabling remote access to PCs or Macs, and GoToWecast, for meetings that support up to 5,000 attendees. The possible options include selling the business or spinning it off, according to officials.
They also said Citrix is talking with other companies about buying its ByteMobile mobile analytics business.
The company also announced that earlier this year it engaged a financial advisor to provide strategic advice related to a potential sale of its ByteMobile business. Citrix is currently in active discussions with third parties regarding a potential sale.