Citrix Systems (NDAQ:CTXS) announced this morning that it has closed its acquisition of XenSource for $500 million which was first announced in August. The move makes Citrix the first company to offer end-to-end virtualization, including application, desktop and server virtualization solutions. The news sent Citrix shares up more than three percent so far today.

"Citrix is now positioned to be a key provider of server, desktop and application virtualization technologies, a market which IDC expects to be worth in excess of $3.4 billion by 2011," said John Humphreys, program vice president, IDC. "Citrix's new end-to-end virtualization offerings augments the company's application delivery strategy and represents the foundational components of the future application delivery environment."

The new virtualization portfolio includes server virtualization with Citrix XenServer, application virtualization with Citrix Presentation Server and desktop virtualization with Citrix XenDesktop. Combined, these solutions enable businesses to essentially run their entire computing platform from one remote server and have computers "dial-in" to the server every time they require access to key programs and applications.

Many investors are bullish on this news as the stock may start to move the same way as VMware, which has exploded in value recently. Citrix shares are trading near their 52-week highs of $42.90 and well off their lows around $26.10. The company trades at a 36x earnings multiple, however, which is substantially lower than VMware's 270x valuation.

In the end, Citrix is definitely a stock to keep an eye on as it will likely become a key player in the extremely hot virtualization market. Some traders are even considering a pairs trade between the overvalued VMware and the undervalued Citrix given that they are now in the same market. Combined, these factors make CTXS a stock worth watching!

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