Micro Focus share price crashes as group warns on revenues

Move follows disappointing performance at HPE software business

Micro Focus share price crashes as group warns on revenues

Shares in Micro Focus (LON:MCRO) have taken a heavy hit today as the company warned of lower revenues in the 12 months to October, following a disappointing sales performance at its recently acquired HPE software business. The blue-chip group, which focuses on licensing legacy software used by major corporations, further unveiled a string of board changes, which will see Mike Phillips, currently CFO, move to the new role of Director of M&A, to be succeeded by Chris Kennedy at the top finance job.

As of 10:55 GMT, Micro Focus’ share price had tumbled 16.93 percent to 2,144.75p. The shares are weighing on the benchmark FTSE 100 index which currently stands 0.05 percent lower at 7,720.43 points.

Micro Focus results disappoint

Micro Focus announced in a statement this morning that its reported revenues in the six months to October 31, 2017, were $1.23 billion, 80.3 percent higher than in the prior-year period, with HPE Software contributing $569.8 million. The company’s adjusted diluted EPS in the period meanwhile increased by 16.4 percent to 103.87 cents.

The company, however, noted that HPE Software’s revenue for the 12 months ended October 31, 2017 was at the bottom of its guidance range and warned that it anticipated its revenues to decline by between two percent and four percent in the financial year ending October 31, 2018.

Analysts weigh in

Reuters quoted analysts at Numis as commenting that while on a pro-forma basis the results were about one-two percent behind their expectations, a materially lower tax rate than it had expected would boost earnings per share and free cash flow.

“Overall the operating performance is modestly disappointing but more than offset by tax, and the building blocks are clearly in place for delivery of the long-term strategy,” the broker said, as quoted by the newswire.

As of 11:12 GMT, Monday, 08 January, Micro Focus International plc share price is 2,151.61p.

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