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Micro Focus shares cut in half after sales warning and Chief Executive Officer exit
Since Micro Focus, the global software company, posted its interim results in January 2018, revenue has dropped more than anticipated, the company has reported.
Micro Focus is now expecting revenue over the twelve months to October 31, 2018, to fall between 6% and 9%, compared to previous guidance of a drop of 2% to 4%.
Shares in Micro Focus fell by almost 55% to 1,029 pence in London, the most since February 2006. "Clearly we have let people down with this execution and we have to rebuild that trust," Kevin Loosemore, Chairman of Micro Focus, said in an interview. The worst area of business was licence fee sales in North America, he added, in part down to a high staff turnover.
Micro Focus has also announced that Chief Executive Officer Chris Hsu has resigned in order to pursue another opportunity and has stepped down immediately. Stephen Murdoch, currently Micro Focus’ chief operating officer, has become the new CEO.
In September Micro Focus wrapped up its $8.8 billion acquisition of Hewlett Packard Enterprise’s software assets, such as application delivery management, big-data analytics and enterprise security. Hsu, a former HPE executive, took over as Chief Executive Officer of the combined group following the deal’s completion.
Micro Focus’ management believe the hit to revenue to be largely a one-off. Micro Focus added that it expected the impact on earnings to be matched by the fall in costs.
In January Micro Focus slumped the most in almost seven years after predicting falling sales and reporting revenue at its HPE Software business at the low end of its forecast range.
"The strategy remains the same," said Loosemore. "We believe this deal will turn out to be a good deal. We think the market in infrastructure software will continue to consolidate and we hope to participate in this consolidation."