Virtualization specialist Citrix Systems
The company reported fourth-quarter earnings recently, with total revenue climbing 17% to $619.4 million. After everything was said and done, non-GAAP earnings per share jumped by a fifth to $0.78. Unfortunately, investors aren't too impressed, with shares finishing the day down 3.8%. Are shareholders asking for too much? Or is their skepticism deserved?
One reason Citrix lagged today is that first-quarter profit guidance came in on the light side. While the expected revenue range of $555 million to $565 million plays reasonably well with the consensus estimate of $561.4 million, the bottom-line forecast of $0.49 to $0.51 per share was shy of the $0.56 the Street is looking for.
The scaled-back bottom line projection is due to Citrix's investment in development, consulting, and sales teams meant to facilitate growth in the future. Citrix has also been acquiring smaller players here and there this quarter to strengthen its cloud and data sharing offerings, such as App-DNA and ShareFile.
CFO David Henshall said he expects some of the acquisitions to be dilutive to consolidated earnings in the near term, but they should become accretive toward the tail end of this year as Citrix builds out capacity.
Citrix also partnered with Cisco Systems
Citrix's guidance differs slightly from rival VMWare's
Investing in the future is the right call to make, especially with a space as important as virtualization. Shareholders dumping shares today because Citrix may take a short-term dip on the bottom line for the sake of long-term growth up top are myopic.
I'm even following up my words with a thumbs-up CAPScall today. Virtualization isn't slowing down anytime soon, and neither will Citrix.
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Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Cisco Systems. Motley Fool newsletter services have recommended buying shares of VMware and Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.