Why Citrix Shares Slumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of cloud computing company Citrix Systems slumped 11% this morning after its preliminary quarterly results disappointed Wall Street.

So what: The stock has staggered in recent months on concerns over slowing growth, and today's downbeat guidance for the third quarter only reinforces that worry. Specifically, the weak outlook suggests that Citrix continues to face delays in its cloud computing deals and that demand for its networking products -- a source of strength last quarter -- is weakening, giving investors little reason to stick around.

Now what: Management sees third-quarter adjusted earnings per share of $0.68-$0.69 on revenue of $710 million-$712 million, well below the consensus view of $0.73 and 737 million, respectively. "While we are disappointed that we fell short of our expectations this quarter, we remain confident in our strategy and markets," CEO Mark Templeton reassured investors. "Our focus remains steadfast on helping our customers leverage cloud services and business mobility to improve the security and agility of their IT infrastructure." Of course, when you combine all the uncertainty surrounding Citrix's growth trajectory with the stock's still-lofty price multiples, I wouldn't be so quick to bet on it.

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The article Why Citrix Shares Slumped originally appeared on Fool.com.

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