Micro Focus' shares bomb on HPE woes

Micro Focus sees shares drop over nine per cent as revenues at soon-to-be acquired HPE software arm disappoint

Software vendor Micro Focus has seen its share price drop nine per cent after a trading update revealed revenue for Hewlett Packard Enterprise's (HPE) software unit, which it is set to acquire, was down 10 per cent.

Micro Focus and HPE last year announced plans for a spin merger of HPE's software assets with the Newbury-based vendor.

However, in a trading announcement this morning Micro Focus announced that for the quarter ending 30 April 2017 HPE's software arm saw a year-on-year revenue decline of approximately 10 per cent, attributed to a drop in licence and professional services.

Kevin Loosemore, executive chairman at Micro Focus, attempted to reassure shareholders but failed to prevent the 10 per cent share decline.

"We are excited about the opportunities of our business combination and are pleased to have obtained all regulatory approvals and the new debt facilities," he said.

"We look forward to being able to combine the businesses and to fully implement the Micro Focus "business model.

"We are encouraged by the early progress that HPE Software's management are making on implementing operational efficiencies and the speed of change in the business. Whilst the short term decline in licence is disappointing it is not unusual given the level of change being undertaken."

Micro Focus expects its revenue for the year ending 30 April 2017 to be no more than two per cent down on management guidance, with a full-year report set to be released on 12 July.

The acquisition of HPE's software division has been given full regulatory approval, with a meeting of Micro Focus shareholders to complete the deal expected to take place soon.b