While Citrix management has done a decent job meeting analysts' estimates, the entire virtualization market is going through a transitional period where strategic partnerships with, for instance, Cisco ( CSCO) have been advantageous to both Citrix and VMware. But there are also signs that the market has gotten saturated. To that end, investors should also focus on how Citrix performs in product and license revenue, which have been less than stellar of late. It will be encouraging if Citrix can regain the momentum it demonstrated earlier in the year when that business posted growth of 17%. Last but not least, revenue from license updates will give investors insight to how strong of a pipeline management has built in terms of recurring business. The strength of Citrix's pipeline has (in the past) helped the company offset the weak corporate spending environment.
The other issue to note will be the progress of Citrix's mobile strategy, which the company initiated with its acquisition earlier this year of mobile device management company Zenprise. To differentiate itself from VMware and Red Hat, Citrix is looking to leverage its current mobile suite that includes GoToMeeting, Podio and ShareFile. The question, though, is to what extent Citrix can duplicate its PC success in the realm of mobile. In that regard, the investment case for this stock will be based on how quickly management is able to build Citrix's capabilities into cloud-based technologies that maximize mobile utilization. Not to mention, these services will need strategic pricing that meets both the company's growth demands and shrinking IT budgets. I've never been a fan of stocks that are priced for perfection. While I do believe Citrix will eventually emerge out of this rough patch, I can't ignore the challenges ahead, especially given the premium this stock still carries. Until there are clearer signs that management is able to revive the company, I'm going to remain on the sideline here. At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssenseThis article was written by an independent contributor, separate from TheStreet's regular news coverage.