UPDATE 2-Citrix Q2 profit beats Wall St view; cuts '08 outlook

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July 23 (Reuters) - Infrastructure software maker Citrix Systems Inc (CTXS.O) reported a 35 percent drop in second-quarter profit but beat Wall Street view as revenue rose 17 percent.

The company modestly trimmed its 2008 outlook as it said it expected only $25 million in 2008 revenue from its Xen server virtualization business, instead of the previously forecast $50 million.

For 2008, Citrix now expects earnings of $1.54 to $1.60 a share, excluding items, on revenue of $1.59 billion to $1.62 billion.

The company had earlier forecast 2008 earnings of $1.54 to $1.64 a share on revenue of $1.60 billion to $1.65 billion.

Analysts were expecting earnings of $1.59 a share on revenue of $1.62 billion for 2008.

In a conference call with analysts, Citrix said its new original equipment manufacturer partners have now begun shipping embed server offerings, but the company expected only modest revenue from OEMs in the second half, as it would recognize revenue one quarter in arrear.

The company's second-quarter earnings fell to $34.6 million, or 18 cents a share, from $53.4 million, or 29 cents a share, a year ago. Excluding items, Citrix earned 38 cents a share.

Total net revenue rose 17 percent to $391.7 million.

Analysts on average had expected the Fort Lauderdale, Florida-based company to earn 36 cents a share, excluding items, on revenue of $387.5 million, according to Reuters Estimates.

Citrix, which develops virtualization software that allows a single computer to act like many "virtual" machines, said it expects to earn 12 cents to 16 cents a share in the third quarter on revenue of $385 million to $400 million. Excluding items, it expects 36 cents to 39 cents a share.

Analysts were expecting earnings of 39 cents a share on revenue of $403.2 million.

Citrix's stock has declined more than 14 percent over the last 6 months.

The shares were up 3 percent in trading after the bell, after closing at $27.47 in regular trading on Nasdaq. (Reporting by Sayantani Ghosh in Bangalore; Editing by Gopakumar Warrier)