Share Name Share Symbol Market Type Share ISIN Share Description
Micro Focus International Plc LSE:MCRO London Ordinary Share GB00BJ1F4N75 ORD 10P
  Price Change % Change Share Price Shares Traded Last Trade
  3.40 0.84% 407.20 474,391 16:35:03
Bid Price Offer Price High Price Low Price Open Price
406.00 406.50 409.20 402.70 402.70
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Software & Computer Services 2,317.73 -2,270.93 -683.22 1,366
Last Trade Time Trade Type Trade Size Trade Price Currency
18:05:11 O 4,530 407.20 GBX

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Date Time Title Posts
23/7/202113:39Micro Focus International11,781
31/12/202012:39Micro Focus Question-
05/11/201914:38Micro Focus (MCRO) One in Focus 1
10/8/201214:41Over valued?4

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Micro Focus Daily Update: Micro Focus International Plc is listed in the Software & Computer Services sector of the London Stock Exchange with ticker MCRO. The last closing price for Micro Focus was 403.80p.
Micro Focus International Plc has a 4 week average price of 371.80p and a 12 week average price of 371.80p.
The 1 year high share price is 596.20p while the 1 year low share price is currently 205.80p.
There are currently 335,554,394 shares in issue and the average daily traded volume is 784,313 shares. The market capitalisation of Micro Focus International Plc is £1,366,377,492.37.
hades1: Tipped as a BUY in today's Times Tempus column Micro Focus international Searching for good news in yesterday’s Micro Focus International interim results felt like panning for gold in a sewage farm. It’s there, but you had to know where to look. The company’s shares fell by almost 81p, or 14.8 per cent, to 466¼p, not so much on the expected loss as the lack of forward guidance. “While there is a great deal to do, we are encouraged by our progress and remain committed to delivering revenue stabilisation and sustainable cashflow generation for our shareholders,” was the best that Stephen Murdoch, the chief executive, could muster. The company supplies tailor-made business software. Its problems stem from a $8.8 billion cash-and-shares takeover of Hewlett-Packard software operations in 2017. Within six months, the share price had halved after the management admitted that it had been overwhelmed by difficulties integrating the two businesses. The pandemic has not helped the recuperation. Legal headaches still lurk, although they seem to have been fully provided for. However, this could mark the beginning of the end of the bad news. Murdoch showed greater confidence in his presentation to analysts yesterday, underlined by an interim 8.8 cents dividend that he promised to treble for the year as a whole. Numis, the stockbroker, said that stabilising the firm’s revenue by the end of fiscal 2023 was crucial, adding: “In our view, the share price is highly sensitive to progress towards that goal, with the potential to rise 150 per cent to 200 per cent if achieved, but with risk in a downside scenario.” While it appears that many American investors who joined the Micro Focus share register through the Hewlett Packard deal have lost patience, the group is still backed by M&G, Fidelity, Vanguard and BlackRock. Tempus recommended avoiding the shares a year ago, but the price movement since last November suggests that this could be the time to hitch a ride. Advice Buy Why The company may be turning the corner at last
pikemanspike: Dr K; I'm not convinced. 1. I'm not judging the share price on one day's trading when I say that the market doesn't like this share. 2. Debt - they're treating it as best they can, but there's no way it's anywhere close to ideal. Look at the financing costs - $279m for last year!! As a proportion of profit, operating profit or even total revenue, it's absurdly expensive. They made $5.6m in profit last year; if revenue this year is only 5% lower, what will that translate to on the bottom line? I suspect it will be a big loss. Debt and finance costs are a huge issue here and there's no point in pretending they aren't. 3. Only a year into the turnaround plan? No you're wrong. At yr-end they said 'Micro Focus has completed the first year of a three-year turnaround plan...' So it's now six months later - half-way point, not a third. 4. Increase in licences - the one bright spot, but the fact that you're having to assume what that means just underlines the lack of detail and communication coming from a poor leadership team. AWS benefits - I'll believe it when I see it. Early days, I accept. 5. Profit is important for established businesses. TESLA is a disruptive tech firm and has a valuation based on its potential to change the entire industry. Mcro is not the same kind of business at all and should be showing solid profits, which is why it's in the mess that we see currently. The constituent parts of mcro do not look great on the balance sheet - billions in intangible assets and goodwill. Arguably precious little that could be sold. 6. Key risk - yep, if it stalls the share price dives. That risk hasn't gone away imv. I'll be watching to see if things change for the better, but right now I don't like the news that's coming out or the lack of communication from the ceo. Good luck with your holding. A lot of feelgood comments coming from people here but nothing substantive. I suggest you sleep on it and check your appetite for the risk. I'll be back in if I think the situation is going to improve. GLA.
dr knowledge: Pikeman - not sure I agree with a lot of what you say. Firstly, whilst obviously disappointing, always best to judge the share price at EOD, let's see how the US responds. Secondly debt. As we all know MCRO do not treat their debt in the same way as say a loan you or I could take out, right now they are well within their covenants and have more than enough free cash-flow to service the debt. They'll probably make the decision to reduce debt in July alongside deciding if and at what level to pay a divi. In short, I am not surprised nor worried that they have not reduced debt in what essentially has been a 6 month transition period post the write-down and Covid (even though the latter still had a significant impact during the period). We are also only a third of the way into a three-year turnaround plan, not halfway as you state and there is no harm in reminding ourselves what the objectives of that plan are.......namely, 1. To deliver stable revenues; 2. To achieve EBITDA margins towards the mid-40s per cent range; and 3. to generate at least $US700 million of free cash flow annually. On this basis these interims show continued progress and the plan is on track, the key takeaway for me being the upturn in sales of its application modernisation and connectivity segment (least I am assuming that is the bulk of the 10% licencing increase) which accounts for about 16 per cent of revenues. I could be wrong (I'd really like to see the breakdown of that 10% rise by division) but disagree entirely that the AWS deal will take years to kick-in as judging by these figures, it already is. AWS do of course have other partnerships, but if you can point me in the direction of one on the same terms as MCRO (i.e. preferred partner status with options dependent on AWS performance, not MCRO), I'd be grateful. Finally, I am not an accountant either, but a profit is a profit and it is by no means the sole determiner of either value or price (which a quick look at a stock like Tesla will confirm). The latest analysis from Simply Wall St (17th) has MCRO earmarked as a non profitable entity, but they also have it's share price listed as 53% below fair value when all constituent parts of its finance and business model are taken into account and a P/E of a staggering 0.7 (industry average 4). Worthy to note that their figures are based on those prior to today's news. The key risk here was that these results would show signs of stalling or worst case, reversing (the market will never forgive MCRO again), but instead they show the plan accelerating. I simply can't read that as bad news though like yourself am baffled by the continued, almost unprecedented volatility. Early days, though and my shares are going nowhere. ;-)
dr knowledge: Planit. I honestly think you are getting getting confused with the word "mainframe" which is a physical piece of kit (and nothing to do with MCRO). If you add the word "applications" to it then you've got the essence of what MCRO do. MCRO dont have an "upgrade old mainframe" division, it's the applications they care about irrespective of how old or new the hardware is. In ultra basic terms, they monetize this by 1. maintaining legacy systems (via various licencing agreements); 2. they develop them (via various software enhancements & licencing agreements) and 3. they offer a suite of complimentary products such as analytics, operations management, consultancy and security. The upshot of all this being that they "help organisations run and transform their business". That's what they do. Now if you look at last years figures, the maintenance side of the business saw a revenue decline of 6% (5% in 2nd half), whereas licencing was hit by a hefty 19% drop. Sales of licences for the IT Ops (IOTM), Application Delivery Management (ADM), and Information Management and Governance (IMG) all improved, but Security, along with Application Modernisation and Connectivity (AMC), did not. It's the latter areas MCRO are really focusing on on right now and where our new agreements should really help them bear fruit (the Amazon AWS deal will especially benefit AMC which accounts for c16% of revenue). Essentially then, the turnaround plan is all geared towards greater focus on MCRO's core areas (digital transformation) & greater integration of its product suite, all leading (if things go to plan) to MCRO becoming a more SaaS, Cloud, AI based & end to end solutions provider (even for ancient mainframe applications). ;-) The potential phoenix arising from MCRO's aggressive (and near disastrous) acquisition programme of the noughties is that it has left them with one of the most comprehensive suite of product offerings within the field of enterprise software solutions than any other business on the planet. Meaning, if the integration, rationalisation and partnership programmes are successful (as in the turnaround plan), the sky is literally the limit for MCRO. Link below ain't a bad summary take on events (which more or less echoes what I'm trying to say), but my advice is to banish any thoughts of towering mainframes & men with spanners coming to fix them (nothing to do with MCRO whatsoever) and think applications! ;-) (above link is from a subscription service, if anyone can't access, I'll post the text). ;-)
planit2: @Dr I am not sure why you think there is a misunderstanding. By your own words MCRO earn money by charging clients to "manage & MAINTAIN client legacy mainframes" I think it is pretty clear that once a client has migrated to the cloud, there is no more management or maintenance of their mainframes. We also know from the articles that companies are reducing their costs by 90% so whatever solution they end up with, it will cost much less than the mainframe. I understand that MCRO will make money from the migration, this is great but it is a one off and they also make money by ongoing services and software. A bad scenario might be where MCRO charges $1m per year for mainframe maintenance and management. They then charge the company $2m for migration to an Azure cloud where they use Microsoft software or something else non-MCRO. So MCRO gets a one-off $2m but loses the recurring revenue. A lot of MCRO's software is legacy so part of their current sales drop must be from losing clients as they move to Microsoft or other providers on AWS or Azure. My question to you was how much money do MCRO make from management and maintenance of mainframes as this will be lost over the next few years? I am not trying to be awkward but it is obviously a problem if I don't understand something as important as how they make money.
jw330: People often associate price movement of shares to state of the business. When share prices are dropping they speculate that something is wrong. As long as the business is winning new contracts and reducing their debt I don't see anything stopping it from going up in the long run. The outcome of the next update will decide long term trend of the share price and not by looking at the volumes of buys and sells in a day/week/month.
pikemanspike: The writedown last time came as a bit of a surprise, given the profits, and then the CFO left. I wondered if the writedown was a compromise between the ceo and the cfo, and perhaps the cfo wanted to do more, couldn't get his way and quit. The 'doing more' part, I imagine to be a rights issue. The debt is big, though easily serviced by current earnings, but earnings are declining. I know there's a turnaround plan, but we haven't seen evidence yet that the turnaround is having an impact on earnings, and possibly it won't until all of the transformational elements are in place. But what if the decline continues and outpaces MCRO's ability to pay down the debt? As it stands, it looks as though the management team are managing decline, and I've been invested in a company before that had a turnaround plan which never worked. Now, while the shareprice has some weight (not much though, compared with recent history) might be the best time to launch a rights issue and cut the debt in half to provide more confidence that the rest can be paid down without difficulty. If the old CFO's objection was about the debt level and the method to tackle it, the new cfo should already be onside with the ceo's point of view (if any of my surmising here is close to the truth) and so a rights issue should not be on the horizon, but perhaps there is growing pressure from lenders. Possibly there is pressure that will be hard to resist. If the AWS and Snowflake deals are actually creating positive earnings, this will possibly be a moot argument, but one of the things which struck me about the AWS deal was that it required no investment or action from AWS. If mcro earns from AWS, AWS gets 5% of the business as a gift/payoff, quid pro quo or however you want to put it. But AWS has no skin in that particular game. All of the giving is on the mcro side (and investors get a small dilution within a rising shareprice - hopefully!). All of this, imv, makes the next set of numbers critical. If profit decline has stopped, the share price will rocket, obviously. If it is continuing, we could go even lower. I'd been long from 340p and have top sliced, so I'll be a buyer if the numbers look good, but right now I'm wondering what's going on with the management team and the business, so am in 'watching and waiting' mode with slightly reduced exposure.
purchaseatthetop: and all those conversations above explain why the share price is still 500pish and not 1,500p! The historical recent bad performance, uncertainty of the change program, still falling earnings, debt all mean the market perceives many threats to the company. I see it as a fallen angel (like ITX, AGL, ENET, STX) where previous shareholders have paid the price for the collapsed share price and now the upside is vast as the technology and good management deliver growth and rapid share price rise. By taking a basket of these fallen angels then if one fails to deliver (which is likely) the massive over performance of the others still delivers super-normal portfolio returns. ITX, ENET, AGL have all 2 to 4 bagged, STX is about to rise and MCRO having doubled is about to skyrocket IMO. But it is only a % of my portfolio and I am aware that sh*t happens. I will find out on 19/5/21 (date I think the update will arrive) whether my bets have all delivered and portfolio is a full house. Good luck to all and I think we have good news coming.
purchaseatthetop: 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.
warranty: 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.
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