Micro Focus belches as it struggles to digest HPE Software

Integration a year behind schedule – IT system switch and culture clash blamed

The integration of HPE Software into Micro Focus is running a year behind schedule due to a clash of sales cultures and setting up new IT systems. But at least the rate of falling revenues has slowed.

So said Micro Focus chairman Kevin Loosemore and chief exec Stephen Murdoch, whose backside is still warming a seat vacated by predecessor Chris Hsu in January amid declining organic sales.

Micro Focus has "completed and integrated" 17 buys in the past decade, including Attachmate in 2014, which it described as "transformational" because its assets were equivalent to more than twice the size of the existing Micro Focus business.

Similarly, the "HPE Software integration has involved additional complexities, largely because this was a carve-out transaction, as opposed to the acquisition of a business that has been operating independently," said Murdock.

"The HPE Software business was a small division that did not move HPE's overall performance and was guided by the parent company's strategy and financial goals and as a result often invested in projects to support the hardware-centric HPE business at a group level," the CEO added.

He said a "clarity of purpose, alignment of objectives" and applying Micro Focus's business model were needed to roll out a single "corporate culture" across the business.

"There have been significant integration issues in combining cultures as our people adapt to this more dynamic environment where execution is expected to be faster, operations simpler and people more accountable," said Murdoch.

This was "compounded" by the "complexities of standing up" a new set of IT systems. Micro Focus was updating its own systems but decided to use one inherited from HPE Software across the whole organisation. That system, FAST, went live in mid-November and was dogged by "material and ongoing issues" – though it is now more "stable", the exec assured.

Murdoch said all core business processes can be "executed end to end", but "accomplishing this still requires manual workarounds and as such operational effectiveness and agility are compromised". Doesn't sound very end to end to us at The Reg. He said the resulting backlog of customers and partners invoices is still being "worked through".

Loosemore – one-time boss of reseller Morse, which was bought by fallen giant 2e2 – said that due to these "initial challenges", the integration of HPE Software assets was "running approximately one year behind our original schedule".

Operational difficulties fed into the financial results for Micro Focus's half-year ended 30 April 2018 with sales down 8 per cent year-on-year to $1.974bn. Nearly all of the revenue lines were down with the exception of subscription and SaaS.

Licence sales dropped 18.4 per cent to $396.4m, maintenance was down 3.5 per cent to $1.109bn, and consulting dropped 27.5 per cent $149.9m.

The top line number included an $182.9m contribution in sales from SUSE, which Micro Focus is offloading to a private equity biz for $2.53bn, and was 17.2 per cent higher than a year earlier.

The business made an operating profit of $65m but net finance costs led to a pre-tax loss of $68.5m. However, a tax credit of $688.2m due to the one-off impact of US tax reforms left Micro Focus with a net profit of $619.7m, versus $67.2m in the prior year. ®

Similar topics

Other stories you might like

  • Prisons transcribe private phone calls with inmates using speech-to-text AI

    Plus: A drug designed by machine learning algorithms to treat liver disease reaches human clinical trials and more

    In brief Prisons around the US are installing AI speech-to-text models to automatically transcribe conversations with inmates during their phone calls.

    A series of contracts and emails from eight different states revealed how Verus, an AI application developed by LEO Technologies and based on a speech-to-text system offered by Amazon, was used to eavesdrop on prisoners’ phone calls.

    In a sales pitch, LEO’s CEO James Sexton told officials working for a jail in Cook County, Illinois, that one of its customers in Calhoun County, Alabama, uses the software to protect prisons from getting sued, according to an investigation by the Thomson Reuters Foundation.

    Continue reading
  • Battlefield 2042: Please don't be the death knell of the franchise, please don't be the death knell of the franchise

    Another terrible launch, but DICE is already working on improvements

    The RPG Greetings, traveller, and welcome back to The Register Plays Games, our monthly gaming column. Since the last edition on New World, we hit level cap and the "endgame". Around this time, item duping exploits became rife and every attempt Amazon Games made to fix it just broke something else. The post-level 60 "watermark" system for gear drops is also infuriating and tedious, but not something we were able to address in the column. So bear these things in mind if you were ever tempted. On that note, it's time to look at another newly released shit show – Battlefield 2042.

    I wanted to love Battlefield 2042, I really did. After the bum note of the first-person shooter (FPS) franchise's return to Second World War theatres with Battlefield V (2018), I stupidly assumed the next entry from EA-owned Swedish developer DICE would be a return to form. I was wrong.

    The multiplayer military FPS market is dominated by two forces: Activision's Call of Duty (COD) series and EA's Battlefield. Fans of each franchise are loyal to the point of zealotry with little crossover between player bases. Here's where I stand: COD jumped the shark with Modern Warfare 2 in 2009. It's flip-flopped from WW2 to present-day combat and back again, tried sci-fi, and even the Battle Royale trend with the free-to-play Call of Duty: Warzone (2020), which has been thoroughly ruined by hackers and developer inaction.

    Continue reading
  • American diplomats' iPhones reportedly compromised by NSO Group intrusion software

    Reuters claims nine State Department employees outside the US had their devices hacked

    The Apple iPhones of at least nine US State Department officials were compromised by an unidentified entity using NSO Group's Pegasus spyware, according to a report published Friday by Reuters.

    NSO Group in an email to The Register said it has blocked an unnamed customers' access to its system upon receiving an inquiry about the incident but has yet to confirm whether its software was involved.

    "Once the inquiry was received, and before any investigation under our compliance policy, we have decided to immediately terminate relevant customers’ access to the system, due to the severity of the allegations," an NSO spokesperson told The Register in an email. "To this point, we haven’t received any information nor the phone numbers, nor any indication that NSO’s tools were used in this case."

    Continue reading

Biting the hand that feeds IT © 1998–2021