The clock had been ticking for Citrix Systems (CTXS) management for some time. Headlines earlier this year claimed activist investors, alerted to the name by the poor performance of the shares since the peak at $88.49 back in June 2011, were ready to cause some disruption at the company, a provider of cloud computing and data center infrastructure solutions. This past week, notable activist Elliott Management made its move on Citrix, filing a 13D with the SEC, sending a letter to the Board of Directors outlining a new operating plan and requesting a meeting with top management.

Recently trading around $72 a share (up from $66 before news of Elliott’s 7.1% stake in the company hit the wires ahead of the market open last Thursday), the hedge fund believes Citrix stock can reach $90 to $100 by the end of 2016 if major changes are implemented involving marketing, R&D, the product portfolio, sales channel management and capital allocation.

The vast majority of the potential value creation estimated by Elliott is driven by operational improvements (reducing the operating expense range to 54.5%—55% of revenue by 2017, vs. 63% over the past 12 months), as margin expansion is expected to make up more than three quarters of the value increase, with capital allocation improvements accounting for the remainder.

Elliott, with $26 billion under management, is an aggressive activist boasting a solid track record in technology (recent winning campaigns include BMC Software, Informatica and Riverbed Technology) thanks to its sharp focus on improving operations at its targeted companies. Under the leadership of Paul Singer, Elliott is not easily frustrated or dissuaded from moving forward with its activist campaigns by any pushback from management teams not open to its ideas for improvement.

While Citrix shares last September traded to a high of $72.89, a sharp rebound from the January 2014 low of $51.18, they finished 2014 virtually unchanged, vs. a 13.4% return for the Nasdaq Composite. Just four months into 2015, a negative first quarter pre-announcement raised fresh concerns about the company’s growth outlook and the odds of an activist event taking place. Given its recent uneven performance, Citrix (at the very least) needs to consider trimming its product portfolio via divestitures or a spin-off.

After announcing a restructuring in January involving the elimination of 700 full-time jobs and 200 contract positions (with the goal to save $90 million to $100 million annually), Citrix in April was forced to reduce its outlook for the first quarter, saying it underestimated the impact of the restructuring as well as changes made to its field and channel sales strategies. It’s important to note that the revenue and earnings shortfall came on top of below-consensus guidance for the March quarter given in January.

In the first quarter, revenue rose just 1% to $760.8 million, with product and license revenue declining 12%. Deferred revenue of $1.5 billion advanced $100 million from the year-ago level, but fell $42 million sequentially. CFO David Henshall on the first quarter earnings conference call told investors not to look for “material improvement” in the short term. Indeed, revenue guidance for the second quarter of $785 million to $795 million came in below the consensus estimate of $805.7 million. For 2015, Citrix reduced the guidance ranges for revenue and per-share earnings. Analysts on average now expect top-line growth this year of just 2.8%.

Given the uninspiring growth, many large institutional portfolios have sharply reduced or entirely eliminated their exposure to Citrix shares. In the fourth quarter, Wellington Management and Soros Fund Management closed their positions. In the first quarter, MFS, State Street, Janus Capital Management and Oppenheimer Funds were significant sellers. But other big money managers, sensing positive changes on the horizon, have begun to move back into Citrix after previously trimming their holdings. For example, Fidelity in the first quarter boosted its stake by 79% (purchasing 1.62 million shares) after cutting its position by 18% in the December quarter.

Now that an activist has stepped in, one part of the plan is to pressure Citrix to get rid of some of its smaller revenue contributors or even spin off a division. That would refocus management back on the company’s core assets. On the first quarter call, management said “rationalization of the product portfolio” would continue through the end of 2015; that could be interpreted to mean the bias is toward selling off assets. The company at this point definitely needs to think twice about doing any costly acquisitions, as the $435-million purchase in 2012 of Bytemobile, a provider of data and video optimization solutions for mobile operators, has been a major disappointment, with revenue in the latest quarter declining 50%.

The two core divisions at Citrix—Workspace Services and Delivery Networking—look safe, but the Mobility Apps division (accounting for 22% of total revenue) is prime for some changes because it’s made up of a hodgepodge of units. Within Mobility Apps, the GoToMeeting product (part of the Communications Cloud unit) represents the majority of revenue. But there are several other point solutions in this division (everything from GoToTraining to ShareFile) that aren’t well integrated. Citrix keeps promising more synergies, but it’s been quite slow to produce them.

Elliott Management says Citrix’s product portfolio is too broad and contains far too many underperforming offerings that consume valuable resources, have low or negative return profiles and serve as distractions for management. It calls out ByteMobile in particular as an asset that should be sold or realigned.

As for the GoTo franchise, Elliott says the go-to-market strategy, product development roadmap and end-market “are absolutely distinct from the core of Citrix.” Without any real synergies with the core products, it makes sense to evaluate the separation of this unit. The firm calls GoTo an attractive franchise with a solid market share, saying it has confidence Citrix could realize significant value through several alternative transaction structures, including a sale or spin-off.

On the balance sheet, Citrix has nearly $2 billion in cash & investments, along with convertible notes totaling $1.3 billion. The company is a cash machine (cash flow from operations last year totaled $846 million), and it has been putting some of the money to work repurchasing its own stock, including 2.4 million shares bought last quarter at an average price of $63.12. Elliott believes the balance sheet is being under-utilized given the strong cash flow profile.

At a reasonably higher net leverage ratio, Citrix would have $4.5 billion to $5.3 billion in buyback capacity through 2017 (while still maintaining an investment grade rating), according to Elliott. The firm says debt financing remains at historically attractive levels, so Citrix should take advantage of this opportunity to repurchase up to 61 million shares over the next 30 months, representing about 38% of the current total outstanding shares.

At recent prices, Citrix shares trade at of 20 times the 2015 consensus per-share earnings estimate of $3.56 and 18 times the 2016 consensus of $3.97. For next year, the Street-high EPS estimate of $4.30 looks rather optimistic unless Citrix starts to make some meaningful changes to its operating units.

In Elliott’s “base case” scenario (involving a revenue CAGR of 4% through 2017, operating expenses at 55% of revenue and operating margin at 30%), Citrix would be able to achieve 2017 earnings of $6.20 a share. The firm assigns a P/E of 14.5 to that estimate to generate a price target of $90. In Elliott’s “upside case” (revenue CAGR of 5.5%, operating expenses at 54.5% and operating margin at 30.5%), a price target of $103.85 is generated by applying a P/E of 15.5 to the 2017 EPS estimate of $6.70.