Citrix predicts profit shortfall

Citrix has issued a profit warning for its second quarter, blaming its shift to an electronic licensing model, which generates less upfront revenue, and a general sales slump.

The application server software and services company said that for the second financial quarter ending 30 June, it expects to report total revenue in the range of $105m to $110m, compared with $94.4m for the same quarter last year.

Citrix said it expects earnings per share to be between nine and 11 cents, compared with 16 cents for the second quarter of 1999. It will announce its results on 19 July.

The company's predicted results are lower than the general consensus estimates from Wall Street, which had expected total revenue in the region of $137m and earnings per share of approximately 21 cents.

Citrix blamed several factors for the shortfall. It said the transition in certain accounts from a predominantly shrink-wrapped box licensing model to an electronic one is happening faster than expected, which is having a short-term negative impact on revenue growth.

The company also said the expansion of core business within large enterprise accounts, and growth in certain markets, including Asia, are progressing more slowly than originally predicted.

Mark Templeton, president and chief executive at Citrix, said: "While we are disappointed in the rate at which we are penetrating large enterprise accounts and new geographic markets, we continue to be optimistic about the opportunities presented in the application server market.

"Although the transition to a paper/electronic licensing model is negatively impacting revenues in the short term, we believe the acceptance of this programme by our channel partners will ultimately have a long-term positive impact on our revenue growth."