Citrix Systems: In a League of Its Own (Update 1)

(Updates from 2:46 p.m. ET 12/7/2012 with speculation that Cisco may be interested in Citrix.)

NEW YORK ( TheStreet) -- It's a beautiful thing to see a company separate itself from its competitors and emerge as the "go-to" supplier for one of the biggest industries in the world.

That's what Citrix Systems ( CTXS) has been steadily doing for at least the past eight years. It is just now getting some of the recognition and investor following it so richly deserves.

On Dec. 5, Citrix announced it has entered into a definitive agreement to acquire Zenprise, a leading innovator in mobile device management. Following the close of the acquisition, expected during the first quarter of 2013, Citrix intends to integrate the Zenprise solution for mobile device management with its Citrix CloudGateway and Me@Work solutions for managing mobile apps and data.

This combination will give Citrix the first solution in the industry for managing mobile devices, apps and data from a single, integrated enterprise mobility product line.

That's the hallmark of CTXS. It finds holes that need filling in the world of mobile communications. Then it designs or cobbles together answers to the deficiencies, thus creating a "league" of its own in the mobility industry.

Headquartered in Silicon Valley, Zenprise provides innovative and secure mobile device management. The company has an extensive list of global customers and partners that span a cross-section of countries and vertical industries including: aerospace and defense, financial services, health care, oil and gas, legal, telecommunications, retail, entertainment and federal, state and local governments.

In 2011, Citrix passed the $2 billion revenue mark. As of Sept. 30, its revenue has grown to $2.47 billion. The Zenprise announcement extends the Citrix legacy of strategic acquisitions that expand its business, including ByteMobile in 2012, as well as ShareFile and Cloud.com in 2011, among others.

It is with well-deserved enthusiasm I encourage you to take a tour of the company's fascinating Web site and explore all the ways it serves the business community as well as the individual mobile device user.
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What's really impressive to this analyst is that CTXS has been acquiring all these strategically valuable companies and yet their balance sheet (as of Sept. 30) show that they have zero long-term debt.

That indicates it has been using its rising year-over-year revenue growth (up 13.5% in the latest quarter) as well as its own authorized shares to expand without incurring unnecessary liabilities.

This is one of the hallmarks of effective company management. Look at this five-year chart of CTXS' price and quarterly revenue per share numbers. Two very important trends can be deciphered and both appear opportunistic.

CTXS Chart CTXS data by YCharts

First, the price-per-share for CTXS is about where it was at the beginning of 2012. Second, its quarterly revenue-per-share has been surging steadily. Last quarter was a downer for the company's earnings (down 15% year-over-year), but its trailing 12-month operating and levered free cash flow remained very healthy ($761 million and $464 million, respectively).

As Citrix's blog commented after the latest acquisition agreement:
Given this momentum, today's news is huge. After the closing of the acquisition, Zenprise MDM Mobile Device Management combined with CloudGateway and the Me@Work mobile apps will deliver a comprehensive mobile solution -- offering mobile device, app and data management.
Looking at the mobile market, customers have many options. In many instances, they look to point solutions for MDM or secure email, which force IT to weave a solution together from piece-parts in order to manage and secure mobile apps, content, and devices. Our intent is to solve this problem with Citrix and Zenprise products together.

With Zenprise and Citrix, our customers will be able to get a complete solution that equips IT to securely control all apps and data, empowering people to work from anywhere on any device, and enabling business productivity through mobile work styles.

Here's another reason why the stock may be doing so well Friday: Cisco Systems ( CSCO) CEO John Chambers was quoted as saying his company has gone too long without making an acquisition.

That immediately fueled speculation Citrix could be on Cisco's radar screen.

For those of us who've kept a close eye on Citrix's evolution, we've carefully noted its value proposition it refers to as "any-any-any." That's Citrix's way of offering users access to any app on any device, anywhere.

As users and businesses become increasingly mobile, Zenprise and CloudGateway become key ingredients of the solutions that CTXS is rebranding and offering. Zenprise was a prime choice for Citrix with its leading MDM products.

Zenprise has an experienced team, a history of innovation, and its footprint on well over one million devices owned by thousands of customers gives CTXS a money-making, well-established inroad to yet another way of increasing their earnings in the world of smart phones, tablets and sundry other mobile devices.

Kudos goes out to CTXS for another accretive and well-suited acquisition just when the company needed a "shot-in-the-arm" of more technology "B-12". No wonder its shares have had a nice two-day run since the acquisition announcement, rising 3.3% to over $61-a-share.

Analysts who follow Citrix have a one-year consensus average price target of $79 a share, so this appears to be an auspicious time to begin acquiring CTXS with plenty of upside potential.

At the time of publication the author is not yet long CTXS, but may take a position within 72 hours.

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