VMware's (VMW, EMC) new Horizon 6 platform integrates the company's existing PC and app virtualization offerings (they allow computing resources to be hosted/managed via servers). The company promises common management of apps and desktops, new monitoring/automation tools, and a unified workspace accessible through a single login.
Horizon 6 is aimed squarely at PC virtualization leader Citrix's (CTXS +1.3%) XenDesktop and XenApp platforms; XenDesktop offers a measure of integrated desktop/app management. While Citrix is coming off a rough quarter, VMware saw its end-user computing license bookings rise nearly 30% in Q4.
VMware exec Alistair Wildman asserts Horizon 6's storage virtualization support (through VMware's VSAN solution) puts virtual desktop operating costs on par with regular desktops. "For [virtual desktop] projects, storage is by far the biggest component, so if you can bring that down, you start to get more people interested in deploying them."
Both VMware and Citrix investors were put on edge last fall when Amazon unveiled its low-cost/cloud-based WorkSpaces PC virtualization service. VMware and Citrix each offer cloud PC virtualization (DaaS) solutions via partners.
Microsoft's (MSFT -0.8%) Enterprise Mobility Suite (EMS), due May 1, will combine mobile device/app management, identity/access control (single sign-on is promised for hundreds of cloud apps), and data protection services.
Like rival offerings, EMS will manage devices/apps on multiple platforms (Android, iOS, Windows Phone). It makes heavy use of existing Microsoft management tools, such as Intune and System Center's configuration manager, as well as the new Azure Active Directory Premium identity management service.
Satya Nadella once more talks up Microsoft's willingness to support rival platforms/apps. The company is fresh off changing Windows Azure's name to Microsoft Azure, a move many consider fraught with symbolism.
EMS will join a hotly competitive mobile device/app management market that features VMware's (VMW +0.7%) AirWatch unit, Citrix's (CTXS -0.3%) Zenprise unit, and BlackBerry's (BBRY -2.7%) BES 10, as well as offerings from private Good Technology and MobileIron.
Microsoft is counting on its security/access tools, as well as EMS' ability to complement System Center's data center/cloud management tools (will Microsoft try to bundle/discount?), to help give it an edge.
A day after Wells Fargo upgraded Palo Alto Networks (PANW +5%) to Outperform, Pac Crest has hiked its PT to $75 from $65, while reiterating an Outperform.
The note, which comes 20 days before Palo Alto's FQ2 report, has helped shares move back above $60. They also rallied in December in response to an upbeat Pac Crest note.
Separately, Palo Alto and Citrix (CTXS +1.1%) have announced an expansion of their security/networking partnership (previous). Citrix's NetScaler SDX application delivery controllers (ADCs - they analyze Web traffic at the application level and direct it to/from servers) will now support "virtual" instances of Palo Alto's next-gen firewalls.
The companies note different instances of Palo Alto's virtual firewall products, known as the VM-Series, can be tailored to the needs of different apps when placed within a Citrix ADC. The firewalls still leverage Palo Alto's proprietary PAN-OS operating system.
Citrix (CTXS +2.5%) has been upgraded to Overweight by JPMorgan, and to Buy by Nomura. The votes of confidence come a day after shares tumbled in response to the company's soft guidance and disclosure that CEO Mark B. Templeton will be retiring within a year. Several firms had downgraded Citrix in response to the news.
Tibco (TIBX -1.6%) has been cut to Underweight by Barclays.
Vimpelcom (VIP +0.5%) has been upgraded to Buy by Citi. HSBC cut the Russian mobile carrier to Neutral two days ago.
International Rectifier (IRF +2.3%) has been upgraded to Buy by Citi. Shares sold off yesterday following the chipmaker's FQ2 beat.
Autobytel (ABTL -5%) has been cut to Hold by Ascendiant Capital.
In tandem with its mixed Q4 results, Citrix (CTXS) announces CEO Mark B. Templeton is returning to the company for now, but "intends to retire within the next year," once a successor is named.
Templeton took a leave of absence in October to deal with a death in his family. CFO David Henshall, who has been serving as interim CEO since then, has been promoted to the new position of COO, and will retain some of the responsibilities he assumed in Templeton's absence.
Citrix is guiding for revenue growth of 8%-10% for both Q1 and the whole of 2014. That's below consensus estimates of 10.9% and 11.3% growth. The company has also set Q1 and 2014 EPS guidance ranges of $0.57-$0.60 and $2.85-$2.95, below consensus estimates of $0.69 and $3.35.
Like a number of other tech companies, Asia-Pac has been a weak spot for Citrix: Sales to the region fell 12% Y/Y in Q4. Americas sales rose 8%, and EMEA sales 14%.
The company's deferred revenue balance rose 18% Y/Y in 2013 to $1.4B. $255M was spent on buybacks in Q4, helping EPS beat estimates in spite of a revenue miss.
VMware (VMW) guides in its Q4 earnings slides for Q1 revenue of $1.33B-$1.37B and 2014 revenue of $5.94B-$6.1B (+14%-17% Y/Y), in-line with consensus estimates of $1.35B and $5.99B.
However, license revenue (drives future service revenue) is only expected to grow 12%-14% Y/Y in Q1 (down from a Q4 rate of 15%), and 12%-16% for the whole of 2014. In addition, VMware is guiding for a 2014 op. margin ~31%, down from a 2013 level of 34%. Investments in newly-acquired AirWatch (not expected to be accretive until late 2015) are a likely factor.
Q4's top-line figures (both for total and license revenue) matched those provided last week at the time of the AirWatch announcement.
VMware notes end-user computing (PC virtualization/mobile software) was an area of strength in Q4, with license bookings rising nearly 30%. That could be a positive for rival Citrix (CTXS), which reports tomorrow. Management/automation licenses (tied to VMware's vCloud suite) rose over 40%.
The flip side of these numbers: VMware's server virtualization license bookings growth may have been below 10%. Microsoft's Hyper-V (bundled with Windows Server) has been taking virtualization share.
VMware's unearned revenue balance rose 18% in 2013 to $4.1B. Full-year free cash flow was $2.19B, well above net income of $1.46B. $116M was spent on buybacks in Q4.
Parent EMC, which reports tomorrow morning, is off in sympathy.
Following a transfer in analyst coverage, Deutsche has upgraded Microsoft (MSFT), Oracle (ORCL), and Conqur (CNQR) to Buy, and downgraded Salesforce (CRM) and Citrix (CTXS) to Hold.
Analyst Karl Keirstead, formerly at BMO, likes Microsoft's valuation, thinks (like Evercore) the company doesn't get enough credit for its enterprise ops amid PC concerns, and is hopeful a new CEO will cut costs.
Regarding Oracle, Keirstead thinks concerns about share loss to cloud app providers are priced in at a valuation of 11x 2015E EPS, and thinks app weakness can be offset by database strengths. It's worth noting some think database sales will also be pressured by cloud adoption.
Keirstead believes "the near-term set-up is not ideal" for Salesforce, even if the company remains "an attractive medium-term play on the cloud computing trend." He cites slowing organic billings growth, Japanese weakness, and the major sales leadership overhaul carried out ahead of Salesforce's pivotal January quarter.
VMware (VMW -1.2%), parent EMC (EMC -1.3%), Citrix (CTXS -2%), and SAP (SAP -1.5%) are all lower following news of VMware's $1.54B acquisition of leading mobile device management (MDM) software firm AirWatch.
Citrix (thanks to the Zenprise acquisition) and SAP (through its Sybase unit) compete with AirWatch. As does BlackBerry (BBRY +4.6%), which remains higher following news of its real estate sale plans.
AirWatch's products, which also include mobile app management and security solutions, complement VMware's Horizon Workspace, which provides a secure, siloed workspace for business apps and files on mobile devices. With Citrix and SAP already offering an array of complementary mobile software tools for enterprises, VMware's move is in part an attempt to keep pace.
AirWatch, Citrix, SAP, and BlackBerry, along with other firms such as IBM (previous) and Good Technology, are trying to profit from growing enterprise interest in MDM solutions, which help companies cope with the ongoing bring-your-own-device (BYOD) trend.
In tandem with the acquisition, VMware has reported preliminary Q4 revenue of $1.48B (+15% Y/Y), slightly above a $1.47B consensus. Q4 license revenue is expected to come in at $$687M (+15%), within a guidance range for 12%-16% growth. VMware's full Q4 results are due on Jan. 28.
Intel's (INTC -3.6%) partial blaming of weaker-than-expected Q4 server CPU division sales (revenue +8% Y/Y, but volumes only +1% Y/Y and -3% Q/Q) on a government shutdown comes across as a "bad excuse," thinks FBR.
Though reiterating an Outperform, FBR is skeptical about Intel's long-term 15% revenue CAGR target for its server CPU division. Bernstein questioned the division's growth outlook yesterday afternoon.
Goldman, reiterating a Sell (previous), says Intel's numbers "confirm our view that there is downside, not upside, to Intel's 2014 EPS." It's worried about both server CPU sales and a softening corporate PC upgrade cycle (driven by the Windows 7 transition) following Q1.
JPMorgan, which upgraded Intel going into earnings, is defending the company. It's pleased with stabilizing PC demand and dismisses server concerns, given sales have historically been volatile.
A major headwind faced by Intel's server CPU unit: Server industry revenues have been steadily declining, as demand shifts towards Web/cloud service providers with bigger economies of scale and a penchant for using cheap white-label hardware. IDC estimates total server sales fell 3.7% Y/Y in Q3, and that x86 server sales rose just 2.8%.
Microsoft (MSFT -1.6%) and AMD (AMD -1.1%) are ticking lower following Intel's report. So are server virtualization kingpin VMware (VMW -1.9%), parent EMC (EMC -0.9%), and rival Citrix (CTXS -0.8%). Intel suggested on its CC virtualization growth is softening.
Cisco (CSCO +1.5%) has acquired Collaborate.com, a provider of mobile collaboration apps (task management, document sharing, messaging) backed by cloud-based sharing/syncing services. Terms are undisclosed.
Cisco states Collaborate.com's products will complement its WebEx Web conferencing/collaboration platform, as well as its videoconferencing and unified communications offerings.
Citrix (CTXS - GoToMeeting, Podio) already competes in the mobile collaboration tool market, as do several others firms. Cisco's collaboration sales, which have been pressured by soft videoconferencing hardware demand, rose only 1% Y/Y in the Oct. quarter.
Separately, Cisco is launching a cloud-based PC virtualization service (DaaS) that leverages software from both Citrix and recent VMware (VMW +0.5%) acquisition Desktone, as well as Cisco's UCS servers.
The service will compete against Amazon's WorkSpaces PC virtualization solution, whose November launch led Citrix and VMware's shares to sell off.