Micro Focus Share Discussion Threads

[dr knowledge] 05/5/2021 22:08

Rochdae/Elsa - it's actually a lot simpler than that. MCRO stated that their agreement with AWS was expected to have a "material" impact on revenues. In the financial world "material" is taken to mean 10% or greater & ergo the reason for the £300m figure and the fact that they had to announce the agreement by RNS. ;-)

[rochdae] 05/5/2021 21:42

elsa,
Can't recall now where the 300 million came from. Think it was a broker comment on the likely result of the tie up. Anyway, it was post results and probably an underestimate imo given the accelerated trend in this area and mcro's customer base.



Also mcro innovating across its product offering. Really starting to see the effects of new management and their strategy.

Woefully undervalued here on any financial metric. Andy Brough's interest shows the big players getting interested.

[alex4141] 05/5/2021 20:33

The Gladstone “Wise-guysR21; are doing the same thing over and over again by increasing their short by 0.07%, but expecting different result :-). Best of luck 😉.

[gurunostradamus] 05/5/2021 17:59

Give it time Stoxx67, everything comes to those with patience, it’s not 625 but around +650 should be the target for the next wave coming soon!

[stoxx67] 05/5/2021 17:51

agree GuruNostradamus,

you have to change your monicker now £6.25 didn't come to pass last week ;)

it will be at that level in the next month or so, not long to wait



atb

[sr2day] 05/5/2021 17:40

Are you dollars down?get some fresh air and you may be pounds up.

[jw330] 05/5/2021 17:11

dollars down do you even read what others are writing on here or are you just in your little world arguing with imaginary enemies?

I was addressing concerns about debt from elsa7878

[hem007] 05/5/2021 16:59

I don't see what someone would gain from others panicking and selling or is it just so that they have a laugh.

[mo123] 05/5/2021 16:49

Apart from whats been mentioned earlier, I'm hoping to get some postive forward guidance for OPTIC and its Universe 2021 VR event.

AWS stated that it was expecting top line growth in the Indian mkt, but there may be delays due to Covid. The resulting partnership revenue stream for both MCRO/AWS should, however, come through later this year.

[planit2] 05/5/2021 16:38

Everything suddenly looks very different in 2 years if they have paid off $1bn in debt and manage to keep FCF at 700m or higher.

I want to pick up more under 500p, just waiting for BP to double in the next week LOL

[jw330] 05/5/2021 16:25

I agree the management is playing with fire with the debt so high but it also presents an interesting opportunity if they can keep all the plates spinning. It's a calculation of risk here and thinking about the probability of increasing fcf generation of the business going forward.

[gurunostradamus] 05/5/2021 16:09

It would be foolhardy not to add whilst we are down here testing the 50sma!

[elsa7878] 05/5/2021 16:09

31 October 2020 31 October
2019
$m $m
---------------------------------------- ---------------- -----------
Borrowings (4,640.3) (4,670.7)
Cash and cash equivalents 737.2 355.7
Lease obligations (2019: Finance lease
obligations) (250.4) (23.5)
---------------------------------------- ---------------- -----------
Net debt (4,153.5) (4,338.5)

So net debt ex-leases is $3.9bn.

Not seen anything about revenue forecasts for AWS - where did you get that from.

I have a small investment. Like Andy Brough and the Schroder's team have done extremely well in the last 12 months.

[elsa7878] 05/5/2021 15:55

-- The EUR600m (equivalent to $700.3m) senior secured five year term loan B-1 issued by MA FinanceCo., LLC, maturing in June 2025, is priced at EURIBOR plus 4.5% (subject to a EURIBOR floor of 0.00%) with an original issue discount of 3.0%;

-- The $368.2m senior secured seven year term loan B-3 issued by MA FinanceCo., LLC, maturing in June 2024, is priced at LIBOR plus 2.75% (subject to a LIBOR floor of 0.00%) with an original issue discount of 0.25%;

-- The $650.0m senior secured five year term loan B-4 issued by MA FinanceCo., LLC, maturing in June 2025, is priced at LIBOR plus 4.25% (subject to a LIBOR floor of 1.00%) with an original issue discount of 2.5%;

-- The $2,486.3m senior secured seven year term loan B issued by Seattle SpinCo, Inc., maturing in June 2024,is priced at LIBOR plus 2.75% (subject to a LIBOR floor of 0.00%) with an original issue discount of 0.25%; and

-- The EUR452.8m (equivalent to $528.4m) senior secured seven year term loan B issued by MA FinanceCo., LLC, maturing in June 2024, is priced at EURIBOR plus 3.00% (subject to a EURIBOR floor of 0.00%) with an original issue discount of 0.25%

[rochdae] 05/5/2021 15:55

Yes but revenue forecasts was before the AWS agreement so you need to adjust upwards by around 300 million.

Net debt around 4.2 billion but 700 million in cash so say 3.5 billion. Just over 3x ebitda. Don't see that as excessive.

Not sure of the debt details but no maturities till 2024. By then debt will be less than 2x ebitda and much better deals on refinancing.

For me the main point is the business model going forward. Get that right and the financials follow.

[elsa7878] 05/5/2021 15:46

"We are focussed on delivering the objective of revenue stabilisation as we exit FY23".

Revenue Forecasts $bn
2019: 3,348
2020: 3,001
2021: 2,845
2022: 2,741

So looks like a 5.5% revenue reduction this year and 4% next. 2%? in 2023 and then stabilisation.
Net profit for 2021 and 2022 is stable so guessing it is coming from cost reductions and margin improvement.

On a PE basis it seems very cheap but the debt is hideous. I'm staggered they have gone back to paying a dividend.

Is debt fixed or libor plus % model? Assume the latter.

[gurunostradamus] 05/5/2021 15:25

It’s all doom and gloom probably a good indicator of a bottom being nearby! We are all going to die Capt’n bring back SPATT to the rescue!

[mhard1000] 05/5/2021 15:21

Does anyone know when the next update I scheduled for?

[jw330] 05/5/2021 15:18

it looks like the federal reserve is anticipating increase in inflation. Isn't good to have debt in an inflationary environment because the dollars you've borrowed now are worth less in the future? Especially when we know the terms have been fixed for 3 years?

[sr2day] 05/5/2021 15:11

I am waiting to buy a second tranche.looks like it wants lower before update.

[rochdae] 05/5/2021 15:09

You don't need a rights issue to reduce debt when you are making 500 million in fcf each year. They reduced 400 million last year. Probably more this year. They have 700 million in the bank. It would be a very strange move.

sr2day, how are you feeling about your recent purchase? Optimistic you'll get back to where you bought?

[sr2day] 05/5/2021 14:59

monty may be right about rumour they may try a rights issue to reduce debt.

[p1nkfish] 05/5/2021 14:17

Trend is down, don't fight it, you will lose.
It will turn.
No surprise if at 450p, if lower then 400-422 imho.