Citrix Systems, Officially a Virtualization Play (CTXS, VMW)

Citrix Systems Inc. (NASDAQ:CTXS) has officially become a "virtualization stock" as it announced this morning that it has closed upon the $500 million purchase of XenSource, which was announced in August.  The company now claims that Citrix is now the only company to offer organizations an end-to-end virtualization infrastructure that includes application, desktop and server virtualization solutions.   The company has many other announcements and demonstrations this morning at its App Delivery Expo in Las Vegas:

• Citrix EasyCall allows organizations to communication-enable any application delivered via Citrix Presentation Server or Citrix NetScaler;
• Organizations using Citrix Presentation Server can now record and play-back any user application session with Citrix SmartAuditor;
• Citrix and HP team to offer a unique new PowerSmart capability designed to help customers reduce datacenter power consumption as a core property of their application delivery infrastructure.

Citrix is also seeing shares trade up on an analyst upgrade.  Deutsche Bank raised its Hold rating to a "Buy" rating based on its conviction that XenSource is a legitimate vendor in the virtualization market behind VMWare (VMW).  Deutsche Bank also noted that XenSource could contribute more than expected to the company’s fourth quarter.

As a reminder, Citrix saw shares down briefly about as much as 10% after its earnings report last week.  Shares are up 1.5% at $40.24 in pre-market trading.

Jon C. Ogg
October 22, 2007