Investor blasts Citrix for having 'too many channel partners'

Investor Elliott Management calls for vast overhaul of Citrix strategy in public letter to board

Activist investor Elliott Management has called for a meeting with Citrix's board to overhaul the company's strategy and claimed the software giant has "too many channel partners".

Elliott – which also owns stakes in Riverbed, Juniper and Blue Coat – holds 7.1 per cent of Citrix's stock and yesterday wrote a public letter which called for vast changes at Citrix, including cuts in R&D and the sale of certain units.

The letter also outlined a strategic plan for the company, in which the investors criticised Citrix's channel strategy and called for a "realignment" of its channel management.

"Citrix's channel strategy is stretched across too many channel partners, with important channel-enablement resources being directed to sub-scale partners," the letter from Elliott Management said.

The investor also called for a reduction in Citrix's operating costs and highlighted a number of areas to cut back and change.

"Citrix's cost structure is the result of years of layered complexity and expenses. The structure has become highly inefficient in terms of actual cost and is also ineffective at generating revenue growth," the letter said.

The letter said Citrix's sales and marketing organisation is "operating well below industry benchmarks on efficiency and effectiveness".

R&D was another area highlighted for change.

"Citrix's recent history of funding speculative R&D initiatives without clear route-to-market or tangible competitive advantage must be re-evaluated immediately. These speculative, or non-core projects need to be scaled back or eliminated and resources reallocated to the product categories where Citrix has the greatest likelihood of success," the letter said.

Elliott Management also suggested selling certain Citrix assets, and said "the sale option should be seriously explored" for its application security business NetScaler.

The investment firm also noted examples where Citrix has lost top-level execs to rivals, such as former vice president and general manager Sumit Dhawan, who joined VMware in 2014. "Elliott is looking forward to working with Citrix to address its ability to retain and recruit top talent," the letter said.

This is not the first time Elliott Management has launched an attack on a company's management – last year it derided Riverbed's management after the vendor turned down a takeover bid, and it has also given EMC earache about its ownership of VMware.