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Micro Focus CEO Resigns, Stock Drops 50 Percent

Exiting Micro Focus CEO Chris Hsu

New CEO Stephen Murdoch

Micro Focus International’s stock (MFGP) has dropped more than 50 percent and CEO Chris Hsu has resigned amid a big earnings and revenue warning from the software company.

Among the problems: Micro Focus’s $8.8 billion buyout of certain HP Enterprise (HPE) software assets has become a drag on the company. Overall revenue for the current fiscal year will fall six to nine percent, the company forecast today — a much larger drop than the two to four percent revenue decline that Micro Focus had previously predicted.

Amid those financial challenges, Micro Focus CEO Chris Hsu has “notified the Board of Directors that due to a desire to spend more time with his family he will step down, effective immediately, as CEO and Director of the company.”

In response, the Board promoted COO Stephen Murdoch into the CEO slot. Murdoch was CEO of the company before the HPE software asset acquisition. He previously held key posts at IBM and Dell Technologies.

The HPE software asset deal has worried Micro Focus investors for several months. Back in January 2018, the company’s shares fell 17 percent after Micro Focus announced less-than-stellar six-month interim results.

We’re checking to see if or how Micro Focus’s challenges will impact HPE, which has various financial and business connections to the company.

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1 Comment

Comment

    MF Xemployee:

    I guess a lot of people have seen this coming. Chris was a newbie in CEO club. Micro Focus has a terrible history of treating employees and customers. Its all a BAD-COMBO package.

    Recently we have heard the news about Chris Hsu, Kevin Loosemore, Stephen Murdoch and Mike Phillips have taken 250 million (combined) home. The news came as a face slap on most of the MicroFocus employees as hardly any of them received any bonus or pay hike. As a result, a very good number of great people have left the organisation.

    There is a saying “Make the employees happy, they will make the customers happy. If employees and customers are happy, then the share holders will automatically be happy”. But MicroFocus never seems to understand this simple basic business logic. All they care about is the $$$ for management and share holders.

    I was a MicroFocus employee and i was surprised at the way they do business. I have seen the email forwarded by the new CEO Stephen Murdoch today “March 19, 2018”. I still haven’t seen any concern for the employees. His only concern is for share holders.

    A preview of the email.

    Team,

    Today has been a challenging day for our company in light of the recent announcements. We have seen a material impact on our stock, a negative tone in the press and I’m sure there is a sense of unrest amongst many of your teams.

    In times of change it is inevitable that there is an element of introspection and even speculation. It is key that we get through this quickly and get back to being focused on our customers and partners, our people and running the business. If we effectively manage the business to deliver value to customers, we will in turn deliver returns to shareholders. If we do this, we all succeed and the share price takes care of itself.

    We have to remember that the fundamentals of our business remain very strong. We have excellent, proven software solutions that our customers rely on to run their businesses. Great software is key but the real value comes when our outstanding services and support capabilities help customers maximise the return from their investments in our software. Finally, all of this is underpinned by incredibly committed people in every one of our support functions.
    ————————————————-

    There are only a few people left within the organization and now they feel unrest within the company. A lot of people including people whom i know are already looking for jobs or increased the effort in finding another job.

    The only one thing i can think as of now is, “The greed and poor management finally brought the company down”. On his email Stephen remains confident that the share price will go up soon. Isn’t that a bit of over confidence?

    After this news and the management team running like street dogs after a bone, i would not be surprised,
    1) If the share price drops even further.
    2) A rise in the employee attrition level.
    3) Make this as a reason for not giving bonus and pay hike next year.
    4) Find other ways to take another few millions home for the management.

    Good luck

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