American software company Citrix said it's spinning off its GoTo business into a separate company. The process will save the company some money, but will also see about 1,000 full-time employees and contract jobs lost.
The restructuring will happen this month and in January.
According to the company's press release, the products included in the spin-off include GoToAssist, GoToMeeting, GoToMyPC, GoToTraining, GoToWebinar, Grasshopper and OpenVoice. The new company’s CEO will be Chris Hylen, who is currently the general manager of Citrix's mobility apps unit and the process is expected to be complete in the second half of 2016.
The new GoTo company will be publically traded, and the transaction is intended to be a tax-free spinoff to Citrix shareholders, so they will have shares of two companies.
“Upon review, it is clear to us that the GoTo family of products is best suited to grow and operate as a standalone business,” said Bob Calderoni, interim CEO and president and executive chairman of Citrix. “This separation will create a leading, pure-play SaaS company that will have a targeted focus with the flexibility to invest in its portfolio of products. It will also allow Citrix to refocus and amplify investment in our core mission to enable secure and reliable delivery of apps and data for the modern enterprise. We look forward to a seamless transition for our employees, customers, partners and other key stakeholders.”
Citrix said the move will save $200 million a year in costs and 75 per cent of those savings will be booked in fiscal 2016. Employee severance costs will be $65 million to $85 million in the fourth quarter and fiscal 2016, but the new company will deliver revenue growth of 1 – 2 per cent and have an operating margin of 17 per cent.