Micro Focus is in preliminary discussions to acquire a European and financials turn the corner. US-based services provider by mid-year, to ensure its business keeps growing after year 2000 work dries up.
The Cobol compiler supplier hit bad times two years ago when mainframe sales began to stagnate, but has pulled around with the help of a boom in its year 2000 products. For the full year ended 31 January, Micro Focus saw revenue grow by 36 per cent to $167.3 million. Net profit rose to $14.6 million compared with a loss of $14.7 million this time last year.
Martin Waters, Micro Focus president and chief executive, said: 'Once the year 2000 is behind us, organisations are going to face the issue of needing to figure how to move to new technology such as the internet and client-server. They'll need products and consulting to migrate their applications.'
He added: 'Services make up 10 per cent of our revenue now, and are growing fast, but we will make acquisitions in the services and consulting space.
We need critical mass if we want to offer services, which we see as important to sell software.'
Waters expected to purchase a medium-sized company with about a third of Micro Focus' $167.3 million turnover in the first half of this year, and is in discussions with two players, one in the US and one in Europe.
Micro Focus is aiming to generate services between one-third and one-half of the firm's revenue in the next couple of years.
The company has hired Richard Van Hoesen, former chief financial officer and vice president of finance at Wall Data, as senior vice president and chief financial officer.
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