Citrix CEO change all about profits
Board pushing for cost cutting, analysts say
FORT LAUDERDALE — Fort Lauderdale-based software company Citrix Systems promoted the chief financial officer to CEO for good reason, securities analysts said Tuesday.
Citrix Systems is struggling for growth. So the board is pivoting toward a focus on cost cutting and expanding profits in its appointment of David Henshall as president and CEO. He replaced Kirill Tatarinov, who joined the company as CEO just a year-and-half ago.
Wall Street took a dim view of the late-Monday surprise, with Citrix’s stock falling nearly 4 percent in after-market trading on Nasdaq, following the announcement. On Tuesday, the stock closed at $78.56, down $1.37 or 1.7 percent.
Henshall’s appointment follows a “mutual separation decision” between Citrix’s board and Tatarinov. It has been the second permanent CEO change in three years. Tatarinov was hired to replace long-time CEO Mark Templeton, who left the position in 2015 as a activist investment firm, Elliott Management, sought changes.
While analysts credit Tatarinov with completing Citrix’s restructuring to transform it to all cloudbased services, some board members are likely pushing to sell all or par of the company. Earlier this year, Citrix completed the sale its GoTo Family of businesses LogMeIn.
Citrix also reportedly had bids this spring from private equity — Bain Capital, The Carlyle Group and Thoma Bravo — to take the company private. But after a few months, no buyer has emerged.
Jefferies analyst John DiFucci said Citrix still ”struggles for relevance,” in his note to investors following the CEO change.
The analyst views the CEO change as a shift to a financial focus from a technological one, as of to Henshall is “a very capable finance professional” with “strong operational expertise.” Henshall was also chief operating officer for Citrix, which he joined as CFO in 2003.
In contrast, Tatarinov is a “technologist at heart with operational discipline,” DiFucci said.
DiFucci said in his note to investors, “the shift ... may squeeze further profit out of the company but likely at the expense of already dismal growth.”