Shares of a software company that bought assets of Hewlett Packard Enterprise (HPE) toppled more than 50 percent on Monday after the company cut its revenue forecast and its chief executive resigned.
U.K.-based Micro Focus International said it now expects revenue to fall anywhere between 6 and 9 percent for the twelve months ending October 31, 2018, significantly lower than the 2 to 4 percent decline it predicted in its interim January results.
This was due largely to "one-off transitional effects" of the firm's $8.8 billion takeover of HPE's software assets last year, and issues associated with the implementation of a new IT system, Micro Focus said. HPE was formed in late 2015 as a result of the split of HP into two companies. But before that another British software firm, Autonomy, was sold to Hewlett Packard in 2011 with the $11.1 billion sale later being enshrouded by a legal dispute. Then in 2017, Micro Focus International bought HPE's software assets for $8.8 billion which included Autonomy.
The little-known U.K. company, which provides software and consultancy, has made a number of historical acquisitions. It bought Borland Software in 2009 for $75 million, Attachmate in 2014 for $1.2 billion and Serena Software in 2016 for $540 million.
Kevin Loosemore, executive chairman of Micro Focus International, said the company remained confident in its strategy despite disappointing short-term performance and outlook.
"I would like to thank Chris Hsu for his leadership, tireless energy and enthusiasm over the past 15 months and wish him well in his new venture," Loosemore said in a statement Monday.
"Chris was instrumental in achieving the carve out of the HPE Software business in order that it be merged with Micro Focus. He has led a repositioning of the HPE Software portfolio to the needs of today's market and put in place a plan to increase our effective product investment as we integrate the companies."
Hsu quit the London Stock Exchange-listed company to "spend more time with his family and pursue another opportunity," Micro Focus said.
Stephen Murdoch, who currently serves as Micro Focus' chief operating officer, will replace Hsu as CEO.
The company has a market capitalization of £3.73 billion ($5.2 billion). That's down sharply from its pre-HPE deal valuation of £4.45 billion. Micro Focus was trading at £8.31 a share at about 10:30 a.m. London time (5:30 a.m. ET), down almost 56 percent on the day.