SHARES IN MICRO FOCUS, Blighty's biggest software vendor, plunged by a quarter on Thursday after investors took fright at the company's latest profits warning.
The Newbury-based company, which had already told shareholders in March that the year wasn't going so well, admitted that revenues could fall by as much as eight per cent in the current financial year, which will draw to a close at the end of October. It promised to "accelerate a strategic review of the Group's operations" in response.
In addition to promising "execution improvements" (aka, getting it's sh*t together), the company also claimed that the "deteriorating macro environment" - Brexit, the US-China trade war, rising expectations of global recession and all that - wasn't helping.
However, the main problem is the chronic indigestion the company is suffering as a result of its merger with HPE Software, an operation described by HPE as a ‘spin-merge'. That saw HPE stockholders receiving the wondrous gift of shares in Micro Focus amounting to 50.1 per cent of the company. At the time, HPE described it as "$8.8 billion in value". It's now worth a lot less than that.
The deal promoted Micro Focus to the FTSE-100 and bumped up the company's revenues from a mere $1.38bn in 2017, before completion of the deal in September 2017, to $3.2bn in the year to the end of March 2018. Yes, Micro Focus unpatriotically files its accounts in US dollars (ugh!).
To make matters more confusing, the company chose to put back its year-end from March to October in 2018, making direct year-to-year comparisons more complicated.
New CEO Stephen Murdoch was appointed in March 2018 to whip the company back into shape, after the first of its most recent tranche of profit warnings. Murdoch has promised to continue whipping the company until its performance - and staff morale - improves.
"We have determined that it is appropriate to accelerate the undertaking of a strategic review of the Group's operations with a view to determining where performance can be improved and how the business can be better positioned to optimise shareholder value," blahed Murdoch.
Already, the company has offloaded SUSE Linux to a Swedish private equity firm for $2.535bn in cash, four years after it scooped it up along with Attachmate in a $1.2bn deal - so it shouldn't be short of a bob or two. Other bits and bobs offloaded include Atalla, in November 2018. µ
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