This week the CRN website ran an article quoting "unnamed sources" speculating that Citrix was considering selling or spinning off its online services unit, which operates the GoToMeeting, GoToWebinar, and GoToTraining conferencing products -- as well as a few other collaboration products that don't have quite as high public name recognition.
I have not heard these rumors through my own personal contacts, nor (in the immortal words of Captain Benjamin Willard) would I be disposed to discuss such an operation if it did in fact exist. But in my mind it makes business sense. The conferencing and collaboration business always felt unrelated to Citrix Systems' core virtualization business. The contribution of Citrix Online to overall Citrix revenues is high enough to make it attractive as a business, but not enough of a percentage to decimate Citrix by removing those revenues.
It is a little hard for an outsider to figure the exact revenues that come from Citrix Online, as the parent company financial reports only break out "SaaS division" revenues -- primarily their collaboration products, but also including a few other product areas. Anyway, if you look at the figures for the entire SaaS division, the last annual report (for fiscal 2013) had their contribution at $582.9 million, out of a corporate total $2918.4 million - or about 20% of the company's total revenue.
Sales, marketing, and services represent the bulk of Citrix's operating expenses. They don't allocate the expenditures to their different divisions, but I have to believe that the constant consumer advertising and frontline support services necessary to keep GoToMeeting prominent in the public eye cost a pretty penny. The Enterprise and Service Provider division is used to getting higher revenues at lower volume costs from its products, so Citrix might be happier with a lower overall operating expense burden if it offloaded the SaaS products.
My personal take on the question of sale vs. spinoff is that it would make more sense to spin off Citrix Online into its own independent company. They seem to have strong, well-run management and operations that keep growing business, and I would think the separation from Citrix Systems infrastructure would not cause undue pain. It would certainly cause the least disruption for existing customers.
Selling the division to a competitor would cause a lot of disruption. As good as the GoTo family of collaboration products is, they are not unique in the marketplace anymore and plenty of companies have figured out how to build and offer easy-to-use screen sharing web conference applications. An acquirer would primarily want the goodwill and recognition value of the name, along with the huge customer portfolio. I would fear a reduced concentration on continued product marketing, sales, support, and development once the acquirer got what they wanted from the deal.
If Citrix did look for a buyer, who could it be? The two most obvious candidates are PGi and West Corporation (through InterCall), both of whom have made many similar acquisitions over the years. They could afford the purchase just to eliminate the competition in that segment.
Would Microsoft buy Citrix Online? If so, it would only be to grab the consumer/business portfolio they are trying to reach with "Skype for Business." The Citrix products wouldn't integrate smoothly and I would foresee quick product disintegration. Of course, Microsoft has a history of similar ill-fated acquisitions and I wouldn't put it past them. Their business development group seems clinically insane.
I don't see Cisco buying the GoTo products, as evidenced by their strategic direction after purchasing WebEx. They stopped WebEx's previously heavy direct-to-consumer marketing and firmly packed the WebEx products into an enterprise UC story. While it would be possible to do the same with the Citrix products, they would compete head to head with WebEx and create internal customer confusion. I don't think it's worth the hassle.
Intriguing dark horse candidates include IBM and Oracle. Both companies have played with web conferencing offerings that they have made available to their existing clients, without external marketing or sales to the general public. The Citrix Online products could give either company an avenue to introduce themselves outside their safe and secure enterprise customer base.
As the TV news reporters say, "What will happen? Time will tell. For now, it remains a tantalizing question. Back to you, Ted."
