Citrix announced today that CEO Mark Templeton will be retiring and — in a separate announcement that sounds awfully related — that Elliott Management, the activist hedge fund, is getting a seat on the board.
Templeton, CEO since 2001, will continue working as president and CEO until a replacement is found. Today’s announcement doesn’t spell out any reason for his decision, other than retirement.
Note that Templeton had announced retirement plans last year, following the death of his son. But by June 2014, he had decided to stay.
This past June, though, his job might have gotten more stressful. That’s when Elliott — a fund which has pressed aggressively for changes at Brocade, EMC, Juniper, Riverbed, and other tech companies — amassed a 7.1 percent stake in Citrix (now a 7.5 percent stake) and drafted a letter specifying changes that it believes would improve Citrix’s share price.
That’s the modus operandi for an activist fund: filing an SEC Schedule 13D to declare its ownership stake and attaching a letter not-so-subtly suggesting major changes to a company.
In Citrix’s case, Elliott believes sales and marketing need to improve; R&D needs an operation revamp; and the product portfolio needs some trimming, including the possible selloff of Netscaler and its application delivery controllers (ADCs).
Prior to Elliott’s filing, Citrix had already started making some cutbacks, announcing layoffs of 900, but it apparently wasn’t enough.
Citrix announced today that it’s reached an agreement with Elliott in which Jesse Cohn, the hedge fund’s senior portfolio manager, will join the board. The companies will also seek one more independent board member — one who doesn’t work at Citrix or Elliott.
Cohn is replacing Asiff Hirji, an outside director who founded private capital firm Inflekxion LLC and is HP’s chief restructuring officer. Hirji had been on the board since 2006.
Amid today’s excitement, Citrix announced second-quarter earnings.
Citrix reported revenues of $797 million and net income of $103 million, or 64 cents per share. In the second quarter last year, Citrix had reported revenues of $782 million and net income of $53 million, or 31 cents per share.
Non-GAAP net income of $1.00 per share beat the consensus prediction of 82 cents reported by Thomson Financial. The difference might have been 18 cents-per-share worth of tax benefits.