Micro Focus Share Discussion Threads

[planit2] 08/5/2021 20:02

Roch, I could work it another way, I know this is a more optimistic outlook but you can look at deterioration each half rather than each year H2 2019 was 2.1% higher turnover than H1 2019 H2 2020 was 3.5% higher than H1 2020 There was a turnover improvement to H2 2020 rather than a further sales decline. Working off these figures you could conclude that H1 2021 will be 1% higher turnover than H1 2020 if the performance of H2 2020 is repeated. If MCRO manage a further improvement as the Covid problems clear and you add in a bit of improvement from Snowflake and AWS, then you could quite easily get a turnover increase vs last year.

[elsa7878] 08/5/2021 18:44

Already given you the broker forecasts. Revenue Forecasts $bn 2021: 2,845 2022: 2,741 5.5% revenue reduction for 2021 and 4% for 2022. Presumably H1 will be worse than H2 reflecting the sequential improvement.

[rochdae] 08/5/2021 18:27

I doubt you will hear trading ahead. The most is maybe 6 months ahead of our turnaround schedule. On the financials, as I see it, if we take 'sequential improvement' to mean something different to sequential increase, then we are looking at perhaps 2% per half year. So 4% improvement 2021 over 2020. That would take us to a -5% decline for 2021. Mcro put a 2% decline down to covid for 2020. Assuming a reverse of this takes us to -3%. Perhaps there are are now some positives due to covid and the move to digitalisation etc.. So maybe another 1% here. Anyway, best case scenario would be a moderation in decline for 2021 of -1 to -3%. That's assuming all these positives come into play. But that would be a massive improvement on -10% last year. I still think there will be some upside on costs and margins. Ebitda margin of 41% I agree. Perhaps 42% at a push. Spending on intangibles was nearly 100 million less last year for example. Anyway, as I always say, either it's a good growing company or it isn't and that's the bet here. AWS and snowflake tie up gives confidence of an acceleration in revenue for 2022. New management and new vision is just as important mind you. And lets not forget mcro massively undervalued on financial metrics. Update on 19th probably. Roch

[watfordhornet] 08/5/2021 17:50

What date is the update?Cheers

[stoxx67] 08/5/2021 15:38

thanks PATT not long to wait for the update now this update is important as it should confirm a continuation of the positives of last Qtr, still believe the divi reinstatement was definitive back in Feb, then of course the AWS news soon after provided further momentum. lets see what they offer over the coming several days a few words in the update such as "trading ahead of expectations" or "trading materially ahead of expectations" would suit fine. ;)

[purchaseatthetop] 08/5/2021 14:35

Snowflake is very relevant. They are looking at $580m income for 2021 with GM of 59% Optic was released in March 21 by MCRO and will be adding completely new revenue streams at high GM. This should boost 2021 and really kick in 2022. That is partly where the growth will come. All IMO only

[mo123] 08/5/2021 14:06

Snowflake guiding mkt for strong growth in 2022. Should be a +ve for MCRO Voltage Secure. hTTps://seekingalpha.com/article/4425915-snowflake-expensive-growth

[planit2] 07/5/2021 13:32

@PATT "The second half of FY20 saw a sequential improvement in revenue performance and we have continued this momentum into the first quarter of FY21" I read this as meaning the % drop decline from the previous period was less. H1 -11% H2 -9% Sequential improvement = -1% -> -8% Obviously this should easily be the case as H1 2021 is working off the Covid-impacted H1 2020 figures which already dropped the -11%. The fact they are not expecting to beat these figures is my biggest negative at the moment. How can they be performing well if all other IT companies did well over the last year and MCRO can't even beat the figures when the world was in lockdown?

[planit2] 07/5/2021 13:24

From PATT's post: Planit's forecast: Revenue decline reduced to 1% Gross margin 41% (same as H2, up 2% from H1) Fall in gross profit halted Dividend kept the same Nett debt reduced $350m No Indications on AWS Share price hits 620p and reduces to 580p within month.

[planit2] 07/5/2021 13:19

I do read that as 31 cents for full year as they give the calculation they are approximately working to. They probably also expect to at least repeat those profit figures for this year or they will look incompetent (they would have to reduce dividend or go under the 5 times cover). How they split it this year is anyone's guess, they could wait to end of year or if they are confident they could pay 15.5 cents again.

[scepticalinvestor] 07/5/2021 12:46

Thanks mate.

[rochdae] 07/5/2021 11:22

On the dividend, this was stated in the last results: The board has reviewed and considered the key factors of cash performance, balance sheet and macro-economic factors and have concluded it is now appropriate to re-instate the Group's dividend. The board is recommending a final dividend of 15.5 cents for FY20. This is equivalent to half a year's dividend at 5 x cover. If that is a half year at 5 x cover, does that mean the other half will be the same i.e. 15.5 cents making 31 cents for the full year. 1/3 at the interims means 10 cents to come as a conservative figure? And a further 20 cents in the finals next year..? And another question. What do you understand by 'sequential' as used in the final results? Does that mean in relation to H2 revenue figures or a comparative to H1 2020? Any thoughts? Roch

[purchaseatthetop] 07/5/2021 09:55

PATT forecast: Revenue decline reduced to 3% Gross margin up by 3% Fall in gross profit almost halted Dividend raised Repayment of a few hundred million $ of debt Indications that AWS deal will deliver rapid future growth Share price 650p within weeks Lets see how close I am. Our share price now is the same as it was in December 2020. Since then it has been endless good news but no price rise. Going to happen.

[stoxx67] 07/5/2021 09:50

agree PATT

[purchaseatthetop] 07/5/2021 08:20

Sceptical...possible Friday next week. I am now fully loaded up (enjoying picking shares up for 480's) and ready for GOOD NEWS next week. The market has walked this price down making money on it and now will walk it back up making money.

[scepticalinvestor] 07/5/2021 07:52

TU next week?

[jw330] 06/5/2021 19:45

Yep. Real benefits have not shown up here yet on paper but I'm sure by the time that happens share price is going to be many multiples from where we are.

[elsa7878] 06/5/2021 19:17

Thanks Rochdae.

[warranty] 06/5/2021 18:39

Exactly jw330 and partnering with the likes of AWS and SNOW who will undoubtedly grow rapidly over the next decade can only be good for MCRO holders. Patience, as Andy Brought indicated in his video posted on here the other day, is also a key element of Warren Buffets beliefs, so I’m in no hurry to see MCRO rise as I’m holding for the long term anyway.

[jw330] 06/5/2021 14:35

Indeed, he has made a relatively small bet and this was most probably triggered by one of his investing officers Todd. They are not playing the trading in and out game but more of a decade long hold so as long as the economics of the business stands the test of time entry price is almost irrelevant to them. One of Buffett's greatest strength is his ability to continuously learn from previous mistakes. He made this investment purely based on previous experiences with Google. He did not invest in Googles ipo due to overvaluation by the markets, even though all his holding businesses used googles search engine. That mistake cost them quite a few billions in profit. Snowflake is having a similar disruptive effect on his businesses currently. GEICO is one of his biggest and favourite holdings and they are partnering with Snowflake technology so I think he understands the technology more than he is letting on.

[warranty] 06/5/2021 13:29

Jw330, re your post regarding Buffets recent purchase in Snowflake. The share price is down 45% this year and although it is still on an above average PE, a 40% plus growth rate forecast for the next decade should more than account for that and with a potential market valued at around $81bn to go at I assume Buffet wants to benefit from it. He’s not known for his forays into tech as you say but with the market changing rapidly, he probably sees this as a more than acceptable opportunity? Given our partnership with SNOW, I’m confident that as they grow so will MCRO, so indirectly Buffets purchase gives me even more confidence to grow my holding in MCRO.

[sr2day] 06/5/2021 12:37

meanwhile we are going lower and opportunity to add or get on board.

[dr knowledge] 06/5/2021 12:29

Possibly, but it sure as heck is the reason why so many of us are looking forward to the trading update! Probably too soon to have impacted revenues, but any whiff of news that these new partnerships are bearing fruit will certainly do the share price no harm. Quite a few analysts have already stated that they think 10% for the AWS deal alone is quite conservative.

[rochdae] 06/5/2021 11:50

Thanks Dr Knowledge So that material increase in revenue will take us easily back to revenue growth next year.. Add in those increased margins and what's not to like..

[dr knowledge] 05/5/2021 23:28

It's "Narcissism" actually, but hey-ho. ;-) Ps. See Gladstone increased their short on the 4th. Only 0.07% but enough to fuel the dips we've seen last few days with volume so low.