UK tech whale Micro Focus: Share price halves as CEO quits, sales slide
About that business model of buying legacy software brands..
The brief tenure of Micro Focus CEO Chris Hsu came to an abrupt end today when he quit following a sales slide and confirmation of execution missteps since the purchase of HPE’s Software division.
Hsu only landed the top job at Micro Focus – a kind of shelter home for legacy software brands – in September when it merged with the HPE division he previously ran.
London Stock Exchange-listed Micro Focus said this morning the "rate of year-on-year revenue decline has been greater than [first] anticipated" in January and turnover for fiscal '18 is now on track to shrink 6 to 9 per cent this year, rather than the 2 to 4 per cent earlier forecasted.
The impact of this on “adjusted EBITDA” margin percentage is expected to be “mitigated by the progress made in the cost reduction programme which is tracking ahead schedule”.
Sales were dented by lower licence income and a "number" of other factors that management said were "largely one-off transitional effects of the combination with HPE Software, rather than underlying issues with the end market or the product portfolios".
- Problems related to the new IT system implementation that hindered the “efficiency of our sales team, our ability to transact with partners and our cash collection”.
- Higher attrition of sales people due to integration and systems related issues
- Disruption of ex-Hewlett Packard Enterprise global customer accounts as a result of the demerger of HPE
- Continued sales execution issues particularly in North America.
Micro Focus said Hsu had “submitted his resignation in order to spend more time with his family and pursue another opportunity. He will step down immediately as the CEO”.
This is a relatively quick turnaround of a chief exec, even in the world of tech. Maybe Hsu didn't like what he found. Maybe it was Micro Focus that pulled the plug. Maybe it was a combination of the two.
Current COO Stephen Murdoch has moved into the CEO office and has rejoined the board with immediate effect.
The remaining management team are investing in more field sales reps, will give the top global accounts more love and will try to beef up the exec line-up across the pond, the company claimed.
Micro Focus also reckoned its IT system issues are "under better control" but warned timing for the second phase of the grand internal tech project - moving heritage Micro Focus systems under the new IT system - is under review.
The company's share price – at the time of writing – had fallen by 55.54 per cent since trading began this morning. ®