January 8, 2018 / 9:30 AM / 9 months ago

Micro Focus International sinks after results, outlook disappoints

LONDON (Reuters) - Micro Focus International, the British firm that bought Hewlett Packard Enterprise’s (HPE) software assets in a $8.8 billion deal, said its revenue would fall 2-4 percent in the 12 months to October, after a disappointing sales performance in the acquired business in recent months.

A sign stands outside the offices of Micro Focus after they and Hewlett Packard Enterprise Co announced that Hewlett Packard Enterprise Co will spin off and merge its non-core software assets with Britain's Micro Focus International in a deal worth $8.8 billion, in Newbury, Britain, September 8, 2016. REUTERS/Eddie Keogh

Shares in the FTSE 100 company fell more than 10 percent on Monday after its results for the six months to end-October, including a two-month contribution from HPE, missed some analyst expectations.

The company, which focuses on licensing legacy software used by major corporations, reported a 81 percent rise in revenue at constant currency to $1.23 billion and a 68 percent rise in adjusted earnings to $530 million.

Analysts at Numis said on a pro-forma basis the results were about 1-2 percent behind their expectations, but a materially lower tax rate than it had expected would boost earnings per share and free cash flow.

“Overall the operating performance is modestly disappointing but more than offset by tax, and the building blocks are clearly in place for delivery of the long-term strategy,” the broker said.

Reporting by Paul Sandle, editing by Louise Heavens

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