Micro Focus International is entering a crisis, as it warns revenues will drop by a far greater amount than expected. The company, which is Britain’s biggest tech brand, has seen 56% wiped off its share value – and CEO Chris Hsu has resigned.
Micro Focus had reported a drop of 2 to 4% at its interim financial reports on January 8. Yet now the firm expects revenues to drop from between 6 and 9%, spooking investors and shaking up its leadership.
The drop is mostly related to Micro Focus’ September 2017 acquisition of Hewlett Packard Enterprise’s software business, which cost the Newbury, Berkshire-based company $8.8 billion. That deal made Micro Focus the UK’s most valuable tech business. But HPE’s subsequent performance has fallen short of expectations.
Hsu, a former HPE executive, has stepped down “to spend more time with his family and pursue another opportunity,” according to the company. Stephen Murdoch, Micro Focus’ current chief operating officer, will become the Micro Focus’ new CEO.
He will need to allay fears the company’s bad news does not precipitate a steady slide in fortunes for Micro Focus, which has pursued an aggressive M&A strategy in recent years. Management at the 1976-founded company believe this loss to be a one-off, and that Micro Focus’ revenues will rebound once its HPE assets better integrate.