Shares of the software company, which bought Hewlett Packard Enterprise assets, have plunged more than 50% Monday after the company reduced its forecast for revenue and announced its CEO had resigned.
Micro Focus International, based in the UK, said it is now expecting that revenue would fall between 6% and 9% for the 12-month period through October 31, 2018, which is significantly high than the 2% to 4% decline that it predicted in its January results.
This was mostly due to effects from one-off transactions of the company’s takeover of the software assets of HPE for $8.8 billion in 2017, and with issues that had been associated with implementing a new IT system, said Micro Focus.
In the latter part of 2015 HPE was formed due to the split of HP into two standalone companies. Prior to that another company in Britain, Autonomy, was sold in 2011 to Hewlett Packard, with the sale for $11.1 billion being enshrouded at a later date by a dispute.
In 2017, Micro Focus bought the software assets of HPE for $8.8 billion and those included Autonomy.
The UK business, that is little-known, which provided consultancy and software, has made several acquisitions of significant proportion. It acquired Borland Software for $75 million in 2009, Attachmate during 2014 at the price of $1.2 billion and for $540 million in 2016 it acquired Serena Software.
Kevin Loosemore, the Micro Focus International executive chairman said that the company continued to be confident in the strategy it has despite a current short-term disappointing performance and outlook.
Loosemore also thanked CEO Chris Hsu for his tireless energy, enthusiasm and leadership during the last 15 months and wished him well in the future.
The executive chairman added that Hsu was instrumental in carving out the HPE Software business so it could be merged with the company. He led the repositioning of the portfolio of HPE Software to today’s market needs and implemented a plan for increasing effective production investment as companies are integrated.
Hsu resigned to spend time with family and to pursue another opportunity. Stephen Murdoch, who serves currently as the COO at Micro Focus will become the CEO.
The company has a £3.73 billion, equal to $5.2 billion, market capitalization that is sharply down from its deal valuation prior to its HPE assets purchase of £4.45 billion.