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Citrix cuts jobs and spins off GoTo business to drive profits

Virtualisation giant Citrix will rationalise its operations after a large-scale business review that focuses on its core desktop virtualisation products

Citrix has confirmed it will cut 1,000 jobs from its global workforce as part of an operational re-jig that will also spin off its GoTo web conferencing business.

The firm wants to refocus its business on its core desktop virtualisation and application management products, including XenApp, XenDesktop, XenMobile, ShareFile and NetScaler.

The change is expected to result in some other parts of its product portfolio being discontinued completely or incorporated into some of its other offerings.

Meanwhile, Citrix’s GoTo web conferencing and remote access tools will be spun-off into a separate, publically traded entity.

These changes will lead to a rationalisation of its workforce, Citrix confirmed in a statement, with 1,000 full-time and contract roles axed in November 2015 and January 2016.

The company said it expects to incur pre-tax charges of between $65m and $85m, as a result of the staff severance payments it will make on the back of the job cuts.

The announcement is the result of an internal operational review conducted by Citrix’s board of directors in July 2015 to find ways to increase profit margins and cash flow.

Around the same time, the company’s long-serving CEO Mark Templeton announced his retirement plans. Bob Calderoni was appointed shortly after as interim CEO and president.

The company found itself under pressure from activist investor Elliott Management to restructure its business, and consider selling off part of its product portfolio to improve its financial performance.

In a statement, Calderoni said the changes – which are expected to save the firm around $200m a year – are geared towards simplifying the way the company does business.

“We are simplifying our business in all areas – product, marketing, sales, operations and development,” he said.

“Focusing on our core strengths and simplifying how we work with customers and partners will help us improve execution, drive higher profit and begin investing for growth in areas in which we provide the greatest customer value.”

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