Robin Wauters

Citrix Systems today reported financial results for the first quarter of fiscal 2010 ended March 31, 2010.

In the first quarter of fiscal 2010, Citrix achieved revenue of $414 million, compared to $369 million in the first quarter of fiscal 2009, representing 12 percent revenue growth.

GAAP Results
Net income for the first quarter of fiscal 2010 was $47 million, or $0.25 per diluted share, compared to $7 million, or $0.04 per diluted share, for the first quarter of 2009.

Non-GAAP Results
Non-GAAP net income in the first quarter of fiscal 2010 was $75 million, or $0.40 per diluted share, compared to $59 million, or $0.32 per diluted share, in the comparable period last year.  Non-GAAP net income for both periods excludes the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expenses and charges recorded in connection with the restructuring program that the company implemented in January 2009 and the tax effects related to those items.

In addition to quarterly financial results, Citrix also announced that its board of directors has authorized it to repurchase up to an additional $400 million of its common stock.  As of March 31, 2010, approximately $58 million remained in authority from previous approvals.

Q1 Financial Summary
In reviewing the first quarter results of 2010, compared to the first quarter of 2009:

• In reviewing the first quarter results of 2010, compared to the first quarter of 2009:
• Product license revenue increased 10 percent;
• Revenue from license updates grew 10 percent;
• Online services revenue grew 18 percent;
• Technical services revenue, which is comprised of consulting, education and technical support, grew 18 percent;
• Revenue increased in the America’s region by 14 percent; increased in the EMEA region by 6 percent; and increased in the Pacific region by 13 percent;
• Deferred revenue totaled $636 million, compared to $535 million on March 31, 2009;
• GAAP operating margin was 13 percent for the quarter, compared to one percent in the first quarter of 2009, and non-GAAP operating margin was 23 percent for the quarter, compared to 19 percent in the first quarter of 2009, excluding the effects of amortization of intangible assets primarily related to business combinations, stock-based compensation expense and costs associated with the 2009 restructuring program;
• Cash flow from operations was $144 million, compared with $82 million in the first quarter of 2009; and
• The company repurchased 2.3 million shares at an average price of $43.71.

Financial Outlook for Second Quarter 2010
Citrix management expects to achieve the following results during its second fiscal quarter of 2010 ending June 30, 2010:

• Net revenue is expected to be in the range of $430 million to $440 million;
• Interest income is expected to be $3 million to $4 million;
• Weighted average shares outstanding is expected to be in the range of 190 million to 192 million shares; and
• GAAP diluted earnings per share is expected to be in the range of $0.28 to $0.29. Non-GAAP diluted earnings per share is expected to be in the range of $0.44 to $0.45, excluding $0.08 related to the effects of amortization of intangible assets primarily related to business combinations, $0.14 related to the effects of stock-based compensation expenses, certain charges recorded in conjunction with the company’s 2009 restructuring program, if any, and, $(0.05) to $(0.07) for the effect of the differential between the GAAP and non-GAAP tax rates and tax effects related to these items.

The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Financial Outlook for Fiscal Year 2010
Citrix management expects to achieve the following results during its fiscal year 2010 ending December 31, 2010:

• Net revenue is expected to be in the range of $1.765 billion to $1.78 billion;
• Non-GAAP operating margin is expected to increase by 100 basis points compared to fiscal year 2009, excluding the effects of amortization of intangible assets primarily related to business combinations and stock-based compensation expense, and certain charges recorded in conjunction with the company’s 2009 restructuring program;
• Interest income is expected to be $16 million to $19 million; and
• GAAP diluted earnings per share is expected to be in the range of $1.29 to $1.34. Non-GAAP diluted earnings per share is expected to be in the range of $1.88 to $1.91, excluding $0.33 related to the effects of amortization of intangible assets primarily related to business combinations, $0.52 related to the effects of stock-based compensation expenses, certain charges recorded in conjunction with the company’s 2009 restructuring program and $(0.23) to $(0.30) for the effect of the differential between the GAAP and non-GAAP tax rates and tax effects related to these items.

The above statements are based on current expectations. These statements are forward-looking, and actual results may differ materially.

Company, Product and Alliance Highlights
During the first quarter of 2010, Citrix announced:

• The Feature Pack 1 release of Citrix XenDesktop 4, which sets new scalability records, simplifies management, and lets end user access virtual desktops up to five times faster – all in order to accelerate the adoption of desktop virtualization.
• Citrix XenDesktop 4 was honored as an InfoWorld 2010 Technology of the Year Award winner, selected by editors and reviewers as one of the best and most innovative products on the IT landscape.
• The release of Citrix XenApp 6, with major enhancements to the de facto standard for on-demand application delivery that simplifies management, enhances scalability, and expands high-definition support and self-service access to apps from any device, including PCs, Macs, laptops and smart phones.
• A new high-performance appliance in its Citrix NetScaler MPX family of application networking systems to round out a comprehensive and cost-effective product line that spans small, single application virtual appliances to massive, high-end systems designed to power the world’s busiest websites with unmatched scalability.
• A joint collaboration agreement with Microsoft to accelerate virtual desktop adoption.  The agreement includes the “VDI Kick Start” promotion, which offers new customers a more than 50 percent discount off the estimated retail price and the “Rescue for VMware VDI” promotion, which allows VMware customers to trade in up to 500 View licenses at no additional cost in order to “jump start” a complete VDI solution.  Additionally, the companies will work together to enable the high-definition HDX technology in Citrix XenDesktop to enhance and extend the capabilities of the Microsoft RemoteFX platform, ensuring that virtual desktops are a rich, high-definition experience for all users, regardless of their device, location or role.

In today’s dynamic data center, virtual elements and relationships are in a constant state of flux, making it difficult to capture and rationalize management data into actionable business insights.

To address this problem, Hyper9, the enterprise-class virtualization management company, today announced the latest release of its Virtual Environment Optimization (VEO) solution to give organizations better line of sight into the virtual infrastructure and how critical capacity and performance issues impact business operations.

Hyper9 VEO combines physical, virtual and logical management capabilities that bridge the gap between disparate technology domains and disciplines, and provide better understanding, forecasting and management of virtual environment operations. New features in this latest release include:

• Personalized widget-based dashboards – provide integrated alerting, trending, capacity planning; offer drag and drop customization such as by discipline and role.
• Application-aware capacity/performance visualization – projects when resources will run out (CPU, memory, shared storage), how many more workloads can be added, shortage forecasts and performance hot spots.
• Storage I/O analysis – gives visibility into storage bottlenecks; provides detailed storage metrics such as latency, throughput, IOPS (input/output operations per second) across all storage types including FC, iSCSI and NFS.
• Application service support – provides application tagging and dependency mapping to the virtual infrastructure, impact analysis and service modeling.

Hyper9’s discovery-based technology platform has been proven to deliver near-immediate ROI, helping organizations transition IT from a cost center to a value center. Recent examples include:

• A Fortune 500 electronic company had no way to track VM ownership or determine stale virtual machines – a precursor to VM sprawl. Hyper9 determined that 13 percent of several thousand virtual machines were not being used, enabling the company to delay purchase of eight 8-processor host servers for at total of $272,000 in savings.
• A Fortune 500 retail chain faced significant challenges tracking abandoned VM snapshots that were consuming storage. In less than an hour, Hyper9 identified 12 Terabytes of orphaned files, resulting in $180,000 of reclaimable space.

Novell today announced IBM is delivering a portfolio of software appliances across IBM brands, all powered by SUSE Linux Enterprise Server.

Leveraging the SUSE Appliance Program from Novell, this broad-based initiative enables IBM to deliver “plug and play” appliances that substantially lower the cost and complexity of deploying applications for small and medium-sized businesses (SMBs) and help independent software vendors (ISVs) significantly expand their routes to market.

With just a few mouse clicks, IBM customers and partners can now quickly and easily deploy customized and fully-tested software appliances to physical, virtual or cloud environments, and IBM is offering virtual stacks on the IBM Smart Business Development and Test Cloud.

Software appliances are pre-configured combinations of an application, middleware and operating system integrated into a single image and tailored to run on industry-standard hardware. Using software appliances ISVs can simplify the packaging of their solutions for multiple environments, allowing them to test, deploy and scale their offerings to their customers’ specific needs. This offers unprecedented opportunities to deliver simplified, highly-portable, tailored solutions free of the maintenance headaches that have often plagued enterprise IT. In effect, appliances make it possible to “mass customize” application delivery and furnish a fully-integrated solution faster and more efficiently than before.

The combination of SUSE Linux Enterprise Server and IBM software represents a significant step forward in providing affordable, reliable, easy-to-use software appliances. IBM has created appliances based on SUSE Linux Enterprise Server in the following areas:

• IBM Lotus Foundations – A complete technology and collaboration solution for small and medium-sized businesses. Using software appliances provides faster access and adoption of solutions, from accounting packages to a local network infrastructure.
• IBM Lotus Protector for Mail Security – Protects IBM Lotus® Domino® and mixed email infrastructure from spam, viruses and other threats originating on the Internet. Using software appliances means protection can be installed and running in a matter of hours.
• IBM WebSphere Application Server Hypervisor Edition– Offers all of the robust features of the WebSphere Application Server Family for virtual environments. By configuring and packaging as an appliance with SUSE Linux Enterprise Server, customers can activate an optimized instance of WebSphere quickly and efficiently.
• IBM Cognos Now! – Delivers operational dashboards for real-time monitoring of key performance indicators (KPIs) and metrics across disparate data sources.
• IBM Smart Analytics Optimizer – Enables a new class of high-speed business intelligence and analytic queries.

The Knowledge Base Team at VMware announced the availability of a brand new browser toolbar that will help end users and VMware Tech Support stay in touch with one another and stay informed about updates, patches, documentation information and more.

The new toolbar works with Internet Explorer, Firefox, and Safari.  The toolbar makes use of RSS feeds, Twitter feeds and even supports chat to communicate with VMware staff and experts on hand.

• Instant access to patches, documentation, and more.
• Built-in RSS and Twitter updates direct from Tech Support.
• Live peer to peer chat lets you ask for help from other VMware experts and staff.
• Custom search capabilities.
• Works on IE, Firefox, Safari.
• No spyware; secure, safe, and private.

GTSI recently announced key findings from a recently conducted survey on the state of virtualization in the federal government.

Developed by the Government Business Council (GBC) in partnership with GTSI and Oracle Corporation, the survey reveals the many hurdles faced by federal agencies in implementing virtualization and cloud computing.  The results are of particular importance given the raised levels of government IT activity driven by the recent Office of Management and Budget (OMB) Federal Data Center Initiative. The OMB mandate requires all agencies to take decisive steps toward reducing the costs of maintaining more than 1,100 disparate federal data centers.

Key findings from this in-depth virtualization study include:

• Many federal executives are unfamiliar with virtualization: one-third (33 percent) of survey respondents say they have no knowledge of the concept of virtualization.  A minority (13 percent) describe themselves as “very familiar,” while 54 percent have some intermediate level of understanding.
• Eighty-four percent of federal executives say that virtualization would benefit their agency. Respondents identify a number of incentives for their agency to virtualize their IT environments. Ranking high among these are COOP and disaster recovery and “greener” IT operations, which can reduce data sprawl and energy usage.
• Virtualization faces many roadblocks at agencies, with 65 percent of federal executives citing “implementation difficulties,” 63 percent indicating “operational/management difficulties,” and 62 percent noting “end users’ misconceptions about virtualization control and governance.”
• Federal executives cited the top two effective strategies for facilitating adoption of a virtualized environment as “education and/or training” (57 percent) and “government mandates and standards” (47 percent).

“Federal government agencies continue to be under pressure to control costs, increase energy efficiency, and maintain security,” said Mohamed Elrefai, GTSI VP Enterprise Solutions Group and Marketing. “To achieve those requirements, federal agencies are adopting virtualization as a key component of their consolidation and optimization strategies.  However, as the survey shows, respondents are challenged with how to effectively implement and operate virtualized environments, while addressing security and governance policies. At GTSI, we’ve seen this trend ourselves and help our federal customers on a regular basis migrate to and operate their virtualized IT environments.”

The survey findings will be explored in detail on Tuesday, April 27, at 2:00 PM ET, when GBC, GTSI, and Oracle present a complimentary webinar entitled, “Virtually There: The Federal View of Virtualization Present and Future.”

VMware this week announced financial results for the first quarter 2010:

• Revenues for the first quarter were $634 million, an increase of 35% from the first quarter of 2009.
• GAAP operating income for the first quarter was $102 million, an increase of 18% from the first quarter of 2009.  Non-GAAP operating income for the first quarter was $175 million, an increase of 45% from the first quarter of 2009.
• GAAP net income for the first quarter was $78 million, or $0.19 per diluted share, compared to $70 million, or $0.18 per diluted share, for the first quarter of 2009. Non-GAAP net income for the first quarter was $133 million, or $0.32 per diluted share, compared to $100 million, or $0.25 per diluted share, for the first quarter of 2009.
• Cash and cash equivalents as of March 31, 2010 were $2.8 billion, an increase of 36% compared to a year ago. Total deferred revenues were $1.4 billion, an increase of 48% from the same period a year ago.
• Operating cash flows were $355 million, an increase of 37% from the first quarter of 2009. Free cash flows for the quarter were $326 million, an increase of 68% from the first quarter of 2009.  For the trailing twelve months ended March 31, 2010, operating cash flows were $1.1 billion and free cash flows were $972 million.

US revenues for the first quarter increased 30% to $317 million from the first quarter of 2009.  International revenues for the first quarter grew 40% to $317 million from the first quarter of 2009.

License revenues were $312 million, an increase of 21% from the first quarter of 2009.
Services revenues, which include software maintenance and professional services, were $322 million, an increase of 51% from the first quarter of 2009.

“The quarter’s strong performance reinforces our position that virtualization is becoming a cornerstone for customer’s IT strategy, particularly since it enables them an evolutionary path forward to cloud computing,” said Paul Maritz, president and chief executive officer.  “With this broad acceptance of virtualization, it allows us to maintain an innovative and aggressive strategy to help remove complexity from IT and deliver on our vision of enabling IT-as-a-service.”

Recent Highlights & Strategic Announcements

• VMware Partner Exchange 2010 broke the event’s 2009 attendance and sponsorship records with more than 2,600 attendees and 55 sponsors, including Arrow ECS, Cisco, EMC, HP, Ingram Micro, NetApp, Novell, Trend Micro and Wyse.
• VMware announced a definitive agreement with EMC to acquire certain products and expertise from EMC’s Ionix IT management business, including solutions aimed at delivering improved management and deployment of servers and applications in a virtualized data center.
• VMware announced programs for the Small and Medium Business (SMB) market including the availability of VMware Go, a Web-based service that provides an easy on-ramp to virtualization, and the promotion of vSphere Essentials, offering up to 50% off the list price for SMBs.
• Cisco and NetApp, along with VMware introduced a Secure Multi-tenancy Design Architecture designed to provide enhanced security in cloud environments.