Micro Focus Share Discussion Threads

[smurfy2001] 05/5/2021 14:04

Been a dog recently.

[highlands] 05/5/2021 12:55

My only holding that is red today.

[planit2] 05/5/2021 12:45

Ok, I agree with all of that.
You have a point with the cost cutting, MCRO were reducing costs even before the pandemic and they would have been accelerated. This should help the margins stay high.

Not sure about the divi, they need to pay down debt as there is risk the cost of borrowing will rise over the next 5 years. I don't want them to do everything correctly only to see them wiped out by inflation.

@Dollars that is what I am hoping for too, it would be a great result for the current share price, pricing models look much better when you don't put in a revenue decline :D

[rochdae] 05/5/2021 12:16

Yes Dollars Down, I agree with your assessment. Revenue pretty much flat, though I think they will state a range of -1-3% just to cover themselves. It's margins though that might surprise. We're looking at 41% at the end of H1. What though has been the effect of covid on their cost base and how has it accelerated cost savings? Some IT companies are reporting significant reductions in costs during the pandemic. So we could see margins grow to 42 or 43% compared to 39% last year meaning growth to earnings at the bottom line for this year. There could be upside to this mind you given AWS and snowflake link up and the acceleration to digitalisation..

fcf over 500 million and a chunk of debt plus more dividends coming at the interims are also highly likely.

If they are ahead of projections that 700 million of fcf will soon be upon us with dividends back to 50/60p a year.. More than a 10% yield to look forward to.

[dollars down] 05/5/2021 11:50

Im expecting that the revenue will be inline with last years performance ie around 3 Bill revenue for the year. I doubt there will be growth over last year as such.

If you read the results they do mention that they kept the same momentum in Q1 regarding revenue:

"We are focussed on delivering the objective of revenue stabilisation as we exit FY23 and continue to target incremental improvements in revenue trajectory annually in order to achieve this goal. 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 doubt they would make statements like this if they expect the results for this year to be worse. This was from February 21 and by then they have a good view of H1 at least as the next update will cover November - April

[sr2day] 05/5/2021 11:22

Ha Ha Ha,now you only need to focus properly not microfocus.

[dr knowledge] 05/5/2021 11:16

Yesterday. Thesis was published in 2011. ;-)

[sr2day] 05/5/2021 11:13

When is the last time you bought or sold anything or are you still writing your thesis?

[dr knowledge] 05/5/2021 11:09

Surely that is reverse logic?

[purchaseatthetop] 05/5/2021 09:09

planit2.....I am confused now. Rochdae as far as I can remember was aligned with my view (there or there about) that we would see a continued fall in overall revenue of maybe 3.5% but an increase in gross margin of another 2 or 3% resulting in an almost stabilised gross profit.

I do not think that anybody has suggested revenue growth as yet only 16 months into the 3 year transformation strategy.

[planit2] 05/5/2021 08:29

@rochdae

You mention in your post
"The company reported a sequential increase in revenue in the last results. I'm not sure why you are expecting another 6/7% compound decline in revenue which you seem to imply."

I think I understand what you mean now.
MCRO reported 1454m turnover in H1 and 1505m turnover in H2 so there was an increase.
But H2 is always higher than H1, in 2019 these figures were 1657m and 1691m.

The consensus of analysts (source FT so could be wrong) for 2021 revenue is 2850m, a drop of 4.5% from 2020.
Splitting this into H1 and H2 [in the ratio of the last couple of years] gives H1 revenue forecast of 1394m a drop of 4% on H1 2020.

You seem to be expecting H1 2021 revenue to be above H1 2020, there are no analysts expecting revenue growth this year so I hope you are correct.

I was just pointing out that if everyone is expecting sales growth compared to H1 2020 the share price could fall even if MCRO beat the revenue estimates [but revenue still declines].

I realise there are other performance measures but our difference was only on revenue.

[purchaseatthetop] 05/5/2021 08:05

just added £4.9k at 495p. Great price IMO

[jw330] 04/5/2021 23:50

In any case it's still worth a hold even if it went down to four quid. I see that you were in proactis as well. Held that for years before it shot up. You just don't know what is around the corner... certainly can't tell from looking at charts.

[p1nkfish] 04/5/2021 21:09

Partially agree but as someone with some background I can tell you Berkshire Hathaway screwed up massively on IBM (one example). Their tech forays have been patchy.

[jw330] 04/5/2021 20:41

hxxps://stocknews.com/news/snow-brk-a-brk-b-goog-ko-why-did-warren-buffett-invest-in-snowflake/

Whoever sold their shares, thanks a lot for the opportunity. Buffett has a stake in snowflake. He is aware that they are doing a massive amount of business with them and sees them as the next Google in terms of growth profile...

Microfocus link with them is pretty underappreciated by the markets. This will become apparent in the coming months and years.

[cocopah] 04/5/2021 19:25

Interesting share price movement today. I was in at 4.28 but ‘panicked̵7; over analysts criticism of the debt burden and sold at 5.00. I still think this is a very good business and have been looking for a re-entry point however the debt mountain is still worrisome. Thoughts?🤔🤔

[p1nkfish] 04/5/2021 18:20

A real chance US rates will rise, that is not helping the wider market.
A chance of a bit of a tantrum. Showing up as a collection of small tantrums.

This didn't help this AM (today) at The Atlantic's "Future Economy Summit"from Yellen, pre-recorded yesterday - "It may be that interest rates will have to rise a little bit to make sure our economy doesn't overheat''

It doesn't take much to make people jumpy at the mo.

[garth] 04/5/2021 17:52

Re. Coinbase, I seem to recall the lukewarm reception given to the much vaunted IPO of Lastminute.com seemed to coincide with some considerable shine coming off tech in 1999/2000

That is a market sentiment observation rather than a MCRO one per se

G.

[watfordhornet] 04/5/2021 17:40

Yes - I have that. Will be nice to see it go past 1.40. Started buying at 2.20 a few years back so been a bit painful

[highlands] 04/5/2021 17:03

Agree, Vodafone is my only holding that closed up today.

[rochdae] 04/5/2021 17:01

Scepticlinvestor,

Your strategy is fine if it works. For me I just buy the dips and hold. Got more today. But of course if you can double-guess the market that's fine. It's beyond my ability to do so and I have no faith in those who say it's easy. So I'll wait and read the trading statement and then decide. Long term recovery play, but if we get back to 1500 I'll be up over a million quid. A gamble indeed, but worth a shot and a bit of patience.

[scepticalinvestor] 04/5/2021 16:50

Yes, not worried here at all. It just pays to take the opp when it arises...

[dr knowledge] 04/5/2021 16:46

For all Tech stocks yes! Apple now a massive 4% down (and not a leaky ship in sight). Look on the bright side folks you could have bought Coinbase on its float (as many sadly did). ;-)