Tuesday, October 26, 2010

Bookkeeping: Starting Citrix Systems (CTXS)

Citrix Systems (CTXS) is actually a quite old tech company that I never owned in all these years.  (and I've owned a ton of tech companies)  But lately it has been put into the 'cloud' group by the speculator class, so now has new life.  Its last earning report was actually quite decent, but as with the whole cloud group it was hit hard by the Equinix (EQIX) warning a few weeks ago.  Some stocks have since recovered, while others remain in purgatory in this group.  Since CTXS was able to report earnings last Thursday it was able to wash off some of the stink from EQIX.   Technically, the stock peaked its head over the 50 day moving average yesterday, and today has cleared this level in a firm manner.  

The main risk now (aside from a general market selloff) is other cloud plays still have to report, and as we just saw the reports of other stocks can impact your company, even if they are not even close to being related.  And frankly many of these 'cloud plays' are barely related but the investment world is not acting sophisticated so they get lumped together.  For example F5 Networks (FFIV) reports tonight, and it will probably impact Citrix - even though Citrix is about as related to F5 Networks as it is to Wynn Resorts.  But in a market of first grade logic this is what you have to account for.

I've started with a 2.2% stake very near to $63.  I find the stock expensive but HAL9000 does not care about valuation ...

A quick look at last week's earnings:

  • Infrastructure-software maker Citrix Systems Inc (CTXS) posted better-than-expected quarterly results, helped by strong sales in the Asia-Pac region, and raised its full-year revenue view for the third time
  • For the third quarter, the company, which develops virtualization software that allows a single computer to act like many virtual machines, posted a 43 percent increase in net income at $88 million, or 46 cents a share.  Excluding net tax benefits of about 10 cents a share, the company earned 52 cents a share, beating estimates of 49 cents a share.
  • Revenue rose 18 percent to $472 million. Revenue from Asia-Pacific rose 27 percent in the July-September quarter.  Analysts were expecting revenue of $458.4 million for the quarter.
  • The company raised its full-year sales outlook to $2.04-$2.07 billion, from its previous view of $1.81-$1.83 billion.
Long Citrix Systems in fund; no personal position

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