Tuesday, 20 March 2018 07:47

Micro Focus shares hammered after profit downgrade Featured


Shares of Britain's biggest technology company, Micro Focus, have fallen by nearly half after it warned of a bigger than expected drop in revenue for the 12 months ending October 2018 and its chief executive quit.

At the close of trading on Monday, Micro Focus shares were down by 46% as the news that Chris Hsu, who was appointed chief executive in September after Micro Focus completed its merger with HPE's software division where he worked, had resigned was absorbed.

The purchase of HPE's software division for £6.8 billion (US$8.8 billion) gave Micro Focus assets across DevOps, IT Operations Management, Cloud, Security, Information Governance, and Veritica (Big Data Analytics).

In a statement n Monday, Micro Focus said: "Since the interim results on 8 January 2018, the rate of year-on-year revenue decline has been greater than anticipated and accordingly the Group is issuing revised constant currency revenue guidance for the twelve months ending 31 October 2018 of minus 6% to minus 9% compared to the proforma 12 months ending 31 October 2017.

"This updates revenue guidance of minus 2% to minus 4% provided at the interim results on 8 January 2018. The impact of this on adjusted EBITDA margin percentage for the period is expected to be mitigated by the progress made in the cost reduction programme which is currently tracking ahead of schedule.

"The board expects the group's net debt position at 31 October 2018 to be broadly in line with market expectations."

The reasons for this profit downgrade were listed as:

  • Issues relating to new IT system implementation, which have impacted the efficiency of sales teams, ability to transact with partners and cash collection;
  • Higher attrition of sales personnel due to both integration and system related issues;
  • Disruption of ex-Hewlett Packard Enterprise global customer accounts as a result of the demerger of Hewlett Packard Enterprise; and
  • Continued sales execution issues, particularly in North America.

The company said Hsu had resigned "in order to spend more time with his family and pursue another opportunity".

His place is being taken by Stephen Murdoch, who is the current chief operating officer.


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Sam Varghese

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Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.



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