United Kingdom tech giant Micro Focus halves in value as shares crash

United Kingdom tech giant Micro Focus halves in value as shares crash

Since Micro Focus posted its interim results on January 8, revenue has dropped more than anticipated, the company said Monday.

That compared with previous guidance given in January of a 2-4 percent top-line decline, an outlook which at the time prompted its shares to fall nearly 20 percent.

"Chris was instrumental in achieving the carve out of the HPE Software business in order that it be merged with Micro Focus".

Micro Focus International, based in the United Kingdom, said it is now expecting that revenue would fall between 6% and 9% for the 12-month period through October 31, 2018, which is significantly high than the 2% to 4% decline that it predicted in its January results.

Micro Focus now expects pro forma constant-currency revenue to fall between 6% and 9%. This programme is now running ahead of schedule. Analysts were expecting a 38% adjusted EBITDA margin.

The company, however, moved to reassure investors that the impact on its adjusted earnings before interest, taxes, depreciation and amortisation was expected to be mitigated by the progress made in the cost reduction programme which was now tracking ahead of schedule.


"Furthermore, management indicates that the current period is seeing a worse performance, thus the six months to April 2018 is expected to show revenue down 9-12%", the broker said.

The previously little-known Micro Focus spent $8.8 billion in 2017 to buy HPE's software which included Autonomy, another British firm the US company had bought in an ill-fated deal five years earlier.

Micro Focus said disruption caused by its acquisition of Hewlett Packard Enterprise's (HPE) software unit was a contributing factor.

"We remain confident in Micro Focus' strategy whilst recognising that operational issues have led to a disappointing short term performance and outlook", Executive Chairman Kevin Loosemore said. It had also seen lower than expected licence income. The company further announced that its chief executive was stepping down from the company.

Micro Focus added it still believed the "fundamental thesis of the HPE software acquisition remains intact". "We believe that Micro Focus is well positioned to help our customers with the increasing pace of change across their Hybrid IT environments and to deliver customer centred innovation".

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