Citrix Systems Inc.
) recently entered into an agreement to acquire Bytemobile, a
provider of video and data solutions to mobile network operators.
The agreement was well received by the board of directors of both
companies and is expected to be completed by the third quarter of
As smartphone and tablet usage is gaining momentum in the
corporate world, the need for virtual network for mobile phones is
also on the rise. Higher usage of mobile network has led to
significant growth in network traffic. The acquisition of
Bytemobile will help Citrix to integrate its NetScaler cloud
networking technology with Bytemobile Smart Capacity technology,
thereby reducing mobile network traffic.
The acquisition will also help Citrix gain access to
Bytemobile's huge customer base. It will facilitate improved
performance, better service and user experience, and in a
Continuous product launches and the huge growth opportunity in
the virtualization and cloud computing market (Desktop
virtualization is expected to touch the 100 million personal
computers mark by 2013, and the web conferencing market size will
likely reach $4 billion by 2014) will act as positive catalysts for
the company going forward.
However, the ongoing macroeconomic uncertainty may act as a
headwind for the company as it limits the IT spending of several
firms. Additionally, high cost associated with virtualization may
restrict the long-term prospect of Citrix. Finally, increased
) provides certain downside risks for the company.
We thus maintain our long-term Neutral recommendation on Citrix.
Currently, Citrix Systems has a Zacks #2 Rank, implying a
short-term Buy rating on the stock.
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