Shares in Micro Focus (LON:MCRO) have lost more than a half of their value in today’s session, as the technology group warned on its full-year revenues. The company further announced that its chief executive was stepping down from the company.
As of 11:47 GMT, Micro Focus’ share price had given up 55.49 percent to 837.80p. The fall is weighing on the broader UK market, with the benchmark FTSE 100 index currently standing 1.28 percent in the red at 7,072.30 points.
Micro Focus warns on revenues
Micro Focus announced in a statement this morning that since its interims in January, its year-on-year revenue decline had been greater than expected, and as a result, the company was revising its guidance for the financial year ending October 31, 2018 down to a decline of between six percent and nine percent, as compared with a previously anticipated decline of between two percent and four percent. Micro Focus attributed the lower revenue expectations to a number of factors, including issues related to its IT system, disruption as a result of the demerger of Hewlett Packard Enterprise, higher attrition of sales personnel, as well as sales execution issues particularly in North America.
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 currently tracking ahead of schedule.
Chief executive to step down
Micro Focus further scared investors with news that its chief executive Chris Hsu had submitted his resignation to spend time with family and pursue another opportunity, and would step down immediately. The group’s chief operating officer Stephen Murdoch meanwhile takes over as CEO with immediate effect.
“Clearly we have let people down with this execution and we have to rebuild that trust,” Kevin Loosemore, chairman of Micro Focus, told Bloomberg in an interview.