A year ago, Citrix Systems (NASDAQ:CTXS) understood that traditional licensed-based enterprise software providers were headed for trouble in 2004. Instead of being a victim, the company took out its checkbook and in December 2003 purchased Expertcity for $225 million in cash and stock.
Expertcity offers Web-based products such as GoToMyPC (which allows for remote access to your computer) and GoToAssist (which is an online help desk and call-center assistance). In fact, there was nothing quite like these products on the market. The big question was: Would anyone use this stuff?
Citrix rolled up these products into a new division called Citrix Online and tested its extensive distribution channels. By the third quarter, there was little doubt customers would be interested. There was double-digit growth, as GoToMyPC and GoToAssist snagged customers such as Computer Associates International (NYSE:CA) and Verizon (NYSE:VZ).
Last week, Citrix decided to make another key acquisition. For $50 million, it purchased Net6 Inc., a leader in providing secure access to software applications regardless of location, network, or even device. Launched three quarters ago, the firm built a roster of more than 100 customers and signed partners such as Avaya (NYSE:AV), Cisco (NASDAQ:CSCO), and Nortel (NYSE:NT).
Why the acquisition? Citrix's competitive advantage is providing easy and cost-effective access to software applications. With the hypergrowth of devices and IP solutions, having the technologies of Net6 is certainly strategic. According to Citrix, it is making "the last mile of computing secure, simple for users and adaptable to almost any access scenario."
True, with Citrix's several million dollars in revenues for 2004, the acquisition appears pricey. But so did the deal for Expertcity.
Fool contributor Tom Taulli does not own shares mentioned in this article.
