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Citrix buys Netscaler for $325 million

citrix.jpgYou've probably heard by now about eBay's move to acquire Shopping.com, announced today. But the Silicon Valley Merger Mania continues. We at SiliconBeat just returned from prolonged vacation today, and an exclusive fell into our laps: Citrix, the Florida company that allows customers to access company information from various devices and locations, has acquired San Jose's Netscaler for $326 million.

(Thurs. update: Here's full story in today's Mercury News. Or here.)

Netscaler speeds up the ability of customers like MySpace, Friendster, Zappos -- you name the fast-growing company -- to deliver their applications to end users. The acquisition means venture investors like Sequoia and Gabriel have hit a solid double with Netscaler (investors have pumped in $80 million since 1998).

netscaler.gifIt has been a long road for Netscaler, which almost closed its doors in 2002, when its original product was spurned by companies who were choking with excess capacity after the bubble burst, and so didn't need to boost their application delivery.

The deal also allows Citrix to enter Silicon Valley in a big way, beefing up its local arsenal of talent, as it moves to compete against valley companies like Juniper and Cisco. Citrix picks up Netscaler's 200 employees, half of them here in the valley, half in India. Silicon Valley companies, it seems, are getting gobbled up left and right. The deal follows Juniper's $469 million combined acquisition of Redline Networks and Peribit, announced April 26, to access similar technology, and Cisco's move last week to buy FineGround networks for $70 million, which offers a "compression" technology similar to Netscaler's.

Update II: Here's the announcement.

More from Om (we're linking because he understands this area much better than we do, and sums the deal up nicely, not because of the praise -- though we're grateful!)


Just for the record (see Om's column), BV Jagdeesh was not a founder of Netscalar. Netscalar was founded in 1998 when BV was still at Exodus. He joined sometime in 2001 time frame.

mike on June 2, 2005 7:47 PM
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Congrat's to BV and his team none the less

mike on June 2, 2005 7:48 PM
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Let me clarify what Mike is referring to here ... first, a short disclosure on myself. I'm the director of corporate communications at NetScaler and have been so since February of 2003. I run public relations, media relations, analyst relations (both industry and financial), and customer/partner PR for NetScaler for our vice president of worldwide marketing.

For the record, BV Jagadeesh is founding investor in NetScaler and its current CEO and president. NetScaler was founded by former Sun Microsystems expatriates who initially gave birth to server offload technology to help companies - most public facing at the time (think large amounts of traffic with bursts of event-driven traffic ...). As the market changed, NetScaler was in a situation of not only reinventing itself but fundamentally addressing a new set of challenges that would not only strike these large public websites but also large and midmarket enterprises. This is where BV Jagadeesh comes into the picture in an active role. In August 2000, Jagadeesh was named CEO by the Board of Directors to re-position the company to address this growth market. Jagadeesh is the person who was instrumental in foreseeing the common denominator "pain" that we saw coming as enterprises migrated to deploying applications of all types, over all IP networks, to any location. Clearly, Jagadeesh was joined in his quest by key players at Gabriel Venture Partners, Sequoia Capital, Bay Partners, et al. -- in addition to his strong bench (a highly experienced bunch of executives with big company experience but with a fast growth, emerging company DNA).

I am writing this note for two reasons: 1) people in the industry need to understand that NetScaler has had three lives (initial birth, re-birth, and (now) part of the Citrix customer-centric machine) and, 2) history and the record shows that Jagadeesh and KB Chandrasekhar took a 2-person operation and built a $20+ billion market cap company successfully while solving real infrastructure build-out headaches before passing on the baton to new management at the height of Exodus Comm.

My responsibility is not to act as a personal PR flack for BV Jagadeesh. Rather, my duty and obligation is to communicate the facts and elaborate on them so that the coverage by various contituents in the public domain is fairly portraying and positioning our company - including facts around BV Jagadeesh.

We went to Matt Marshall (the owner of this blog) because both NetScaler and Citrix consider Matt the premier thought leader for the voice of the Valley and his credibility is spotless. Citrix Systems and I definitely patted ourselves on the back for making this call. We are impressed with Matt's integrity, editorial wisdom, and ability to see the significance in a breaking news and its impact on the nation and international IT landscape as a whole. Kudos Matt - it was a pleasure working with you on this significant news. After all, if you're a person who opens a brower or use an application of any sort while at work ... you are touching a NetScaler application netwoking system!

John Oh

John Oh on June 6, 2005 10:11 PM
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Can you hear the BUZZ?????

I would like to also provide my feedback on this recent merger. This clearly validates the application networking market. With all the recent purchasingās (Redline, Perebit & Fineground), I find the Netscaler/ Citrix merger to be the most dominate one. We all know that F5 is running scared right now with all this exciting news, not to mention that some of their top talents have decided to leave and pursue other ventures because they know the end is soon approaching.

Juniper Networks, traditionally a L2-3 provider has entered the L4-7 market by purchasing Perebit & Redline Networks. This was a smart move, but does it really make any sense? I believe this was a move to try and sucker punch Cisco, but we all know that Cisco would soon be on the market to gobble up another start-up. I have also learned that some of the top talents from both start-upās are also leaving. OUCH!!!!

On to Cisco. They announced Fineground would soon be under their belt. Hmmmmmmmmm, Finerground??? I am still trying to think of anything positive about their technology. $70 Million? I think Cisco sneezed that amount. I think that technology is DUST!!!!! I see Cisco trying to buy out another start up within the next 6-9 months.

Besides Citrix dominating their existing market, this now leverages Netscaler to enter into their current database of 160,000 customers along with 7000 partners. WOW!!! This is amazing!!!!! Citrix will also have Silicov Valley presence to compete with Juniper & Cisco. I would expect Citrix to be the leader in this space within the next 9 months. If you donāt believe me, you better go ask somebody.........




Robert on June 7, 2005 8:32 PM
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Huh, I missed the Redline purcahse for $469 million. I've always disliked that company (but I'm biased). They're great at marketing, but their product tends to fail in deployment.

Great for Netscaler though. Layer 7 (application level) management is really a neat area of development. Still I'm sure much to be developed.

(I'm a UC Davis student writing a senior research paper involving a case study of Netscaler's use of offshoring).

Nicholas Blasgen on June 15, 2005 1:16 AM
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