Citrix falls as 3Q revenue misses Street's view

NEW YORK -- Shares of Citrix Systems Inc. dropped more than 5 percent on Thursday as the business software maker's fiscal third-quarter revenue came in below Wall Street's expectations. Its fourth-quarter revenue forecast also fell short of analysts' estimates.

THE SPARK: On Wednesday Citrix reported quarterly adjusted earnings of 68 cents per share on revenue of $641.4 million. Analysts polled by FactSet expected earnings of 65 cents per share on revenue of $650.6 million.

The company forecast fourth-quarter adjusted earnings of 83 to 85 cents per share on revenue of $700 million to $710 million.

Wall Street predicted 84 cents per share on revenue of $715.8 million.

It also lowered its fiscal 2012 revenue outlook to $2.55 billion to $2.56 billion from a range of $2.56 billion to $2.58 billion. Citrix raised its earnings guidance to $2.80 to $2.82 per share from $2.78 to $2.81 per share.

Analysts expect earnings of $2.80 per share on revenue of $2.57 billion.

THE ANALYSIS: Rick Sherlund of Nomura Equity Research said in a client note that the quarterly performance shows a slowdown in license revenue growth, which only rose 1 percent from a year earlier. That was also down from a 9.7 percent increase in the second quarter. The analyst said the slowdown reflects the tough economic conditions that impacted Citrix and the overall software sector during the quarter.

Sherlund cut his share price target to $78 from $86 and reaffirmed a "Neutral" rating.

SHARE ACTION: Citrix Systems shares fell $3.13, or 4.9 percent, to $60.95 in afternoon trading. The stock has traded in a 52-week range of $56.79 to $87.99.