Citrix posts lower rev from key segment, shares fall

Sales from the company's application virtualization business -- its biggest revenue earner, and also its hardest hit business -- fell to $250 million.

Citrix's desktop virtualization business, however, tripled in the third quarter and the company said it expects deal size in the space to increase with the availability of its XenDesktop 4 product this quarter.

Earlier this week, Citrix set new pricing for XenDesktop 4. The earlier pricing would have potentially threatened the adoption of desktop virtualization, according to some analysts.

Desktop virtualization allows multiple network subscribers maintain individualized desktops on a single, centrally located server.

Geographically, the company's Americas business continued to show gradual improvement in demand with a 5 percent growth and many million dollar plus deals, CFO David Henshall said in a conference call with analysts. The company's EMEA business however fell 15 percent.

The company, which develops virtualization software that allows a single computer to act like many "virtual" machines, said it expects a 8 to 9 percent increase in 2010 revenue. For the third quarter, the company posted earnings of $53.4 million, or 29 cents a share, compared with $49.1 million, or 26 cents a share, a year ago.

Excluding items, Citrix earned 43 cents a share while total net revenue was almost flat at $401 million.

Analysts were expecting the company to earn 41 cents a share, on revenue of about $400 million, according to Thomson Reuters I/B/E/S.

The company's main rival, VMware Inc, posted higher-than-expected quarterly results and forecast strong fourth-quarter revenue, sending its shares up 2 percent in extended trading on Wednesday.

Shares of the Fort Lauderdale, Florida-based Citrix fell 5 percent to $39.38 in after-market trade. They closed at $41.36 Wednesday on Nasdaq.

The company's shares have gained 90 percent in the past year, hitting a 52-week high last week. (Reporting by Sayantani Ghosh in Bangalore; Editing by Pradeep Kurup and Aradhana Aravindan)