Citrix to spin off GoTo business, cut 1000 jobs

Software maker Citrix Systems will spin off its GoTo business into a listed company and cut about 1000 jobs, following pressure from activist hedge fund Elliott Management.

The company's shares were down 3 percent at US$76.01 in after-hours trading today.

Citrix said in July it would explore strategic alternatives for its GoTo family of products, which includes videoconferencing and desktop sharing service GoToMeeting.

Elliott in June called on Citrix to sell some units, cut costs and buy back shares to make up for six years of underperformance.

Since then, the stock had gained about 19 percent through today's close.

The GoTo family of products will run as a standalone operaton from the second half of 2016, the company said today.

Citrix will shift its focus to its Xen virtualisation tools and its NetScaler and ShareFile businesses.

"Upon review, it is clear to us that the GoTo family of products is best suited to grow and operate as a standalone business,” Citrix interim president CEO Bob Calderoni said in a statement.

The job cuts do not include the impact of the spinoff, the company said: the 1000 headcount reduction will come from outside the GoTo business.

It did not provide furhter detail, saying only that it would "balance resources with demand across the company’s marketing, general and administration areas."

The company said it expects about US$200 million in annualised pre-tax cost savings, 75 percent of which is likely to be in 2016.

Citrix also said it would incur pretax charges of about US$65 million-US$85 million related to the job cuts in the fourth quarter of 2015 and fiscal 2016.

Most of the restructuring would be done in November and in January, the company said.

Citrix also said it expects a 1-2 percent net revenue growth for the year ending December 31 with an adjusted earnings of US$4.40-US$4.50 per share.