UK Edition
Micro Focus begins to recover after disastrous HP Enterprise deal
Micro Focus posted better than expected results as it pressed on with reshaping its business two years after its troubled deal to buy Hewlett Packard Enterprise’s (HPE) software arm.
The Newbury-based software company, Britain's second largest listed tech firm, aimed to ease investor concerns that teething troubles over the $8.8bn (£6.9bn) deal were coming to an end.
Micro Focus posted a 12-month revenue decline of 5.3pc, slightly better than estimates. In its full-year results, the company said it would extend a $400m share buy back programme by another $110m. Shares jumped 11pc on the announcement.
Despite the bumper deal for HPE's software assets in 2017, Micro Focus endured a difficult 12 months as it bedded in thousands of new employees.
Last year, its shares plunged and chief executive Chris Hsu resigned after it struggled to integrate the new company amid an IT overhaul and sales staff leaving.
The March profit warning cut its share price in half and cost the company its position as the UK's most valuable listed technology firm.
Stephen Murdoch was appointed as Micro Focus's new chief executive in May last year. He had previously served as the boss of Micro Focus up until 2016, but stepped aside for HP's Mr Tsu after the merger.
Mr Murdoch said that Micro Focus was "getting back on track and getting the basics of our business model right".
He said the company had cut its debt ahead of schedule and added it would continue to streamline areas of the business.
Micro Focus is still in the final stages of disposing of its SUSE software business for $2.5bn to private equity firm EQT as it completes an overhaul of its company.
It reported revenues of more than $4bn for the year ending in October 2018. Mr Murdoch said he expected the company to continue to see moderate revenue decline over the next year of between 4pc and 6pc.
Analysts said the results reflected positive news for Micro Focus, although it had been a reporting period complicated by disposals and cut backs.
"This was always going to be a complex update from Micro Focus, but from our first take all the incremental news is positive," Barclays said in a note to clients.
Micro Focus announced the reverse takeover of HPE's software business in 2016, with assets in IT operations and big data analytics. The assets include what was Autonomy, the UK software firm HP bought for $11bn in 2011. It is now the subject of a legal battle between HP and Autonomy founder Mike Lynch.
Mr Murdoch said the dispute was "nothing to do with us and never has been".