Micro Focus share price plummets after putting “operational improvement plans on hold”
Shares in Micro Focus, the UK’s biggest technology firm, dived this morning after the group reported sales had dipped.
Micro Focus, which bought Hewlett Packard Enterprise Software last year, was the biggest faller on the FTSE 100, initially falling over 12 per cent before easing back. Shares are currently 9.45 per cent lower.
Reported six-month revenues were muddied by the Hewlett Packard purchase, up 80 per cent at $1.2bn.
But with acquisition sales stripped out, Micro Focus posted a 2.9 per cent fall in revenue to $664.7m and earnings fell by 4.1 per cent.
Executive chairman Kevin Loosemore said the like-for-like declines were after “we put operational improvement plans on hold while working on the completion of the HPE Software transaction”.
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He added: “The board is confident that medium-term low single-digit revenue growth, industry-leading margins and strong cash conversion will ensure that Micro Focus can deliver on its strategy. These returns can be further enhanced by appropriate deployment of capital in value-enhancing acquisitions.”
Meanwhile, Micro Focus also announced a boardroom shake-up. Current finance chief Mike Phillips is to move to a new role of director of M&A. He will be replaced by Easyjet’s former chief beancounter Chris Kennedy as CFO and Ian Fraser as chief human resources officer.
Worry
The appointments take place with immediate effect and mean Phillips will step down from the board at the end of the month.
The boardroom shake-up was labelled a “worry” by Accendo Markets head of research Mike van Dulken.
The CFO has moved to a more M&A focused role, suggesting more purchases, acquisition risk and integration of slower growth. Although at least his replacement has pedigree as ex-CFO of ARM Holdings, easyJet and EMI. Perhaps investors need more time to see that the latest monster acquisition is providing value before hearing more about incremental additions of the older product types the company likes to eke the most out.
Loosemore said: “Both Chris and Ian bring recent relevant experience in functional terms and also in dealing with listed businesses of scale in the UK and the US, and we welcome them to the team.”
Read more: Micro Focus share price boosted by newly acquired HPE software