Thursday, April 25, 2013

Is the Optimization Market Declining?

Had Citrix acquired Bytemobile for its network optimization solutions, or to boost its load balancing sales (NetScaler) vs. F5? (probably the product most Bytemobile customers were using before the $435M cash  acquisition).

David James Henshall (pictured), Citrix' CFO, said on the company's Q1 earning call that "Bytemobile solutions contributed just a few million dollars of product revenue in Q1. We remain confident in the outlook for the full year, but as we've discussed previously a few times, the timing of closing large engagements, as well as the specific contract terms of those deals will cause a recognition of revenue to be uneven throughout the year .. So still on track from a Byte business to contribute the $50 million guidance number that we had put out there in 2013, still feel very good about that".

Nevertheless, for Citrix, Bytemobile helps selling NetScaler, the load balancing product - "In terms of Bytemobile pulling -- or NetScaler pulling through Bytemobile, in fact, it's usually the other way around. And so what we've seen early on is that for a large Bytemobile deployment, there's generally some functionality that's provided by a NetScaler, whether it's load-balancing or other activities, that while it's early days, the ratio is about 15% or 10% to 15%. So for every $1 of Bytemobile sale, there is an opportunity to pull through about $0.10 to $0.15 of NetScaler"

See "Citrix Systems Management Discusses Q1 2013 Results - Earnings Call Transcript", by SeekingAlpha, here.

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