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UPDATE 2-Shares in Britain's Micro Focus plunge as revenues deteriorate, CEO quits

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* Annual revenues could fall 6-9 percent Chief operating officer to replacing departing CEO

* Shares dive 40 percent (Adds reaction, background)

LONDON, March 19 (Reuters) - Micro Focus International lost 40 percent of its value on Monday as Britain's leading software company lost its CEO and cut its revenue outlook due to problems stemming from the purchase of Hewlett Packard Enterprise assets.

The previously little-known Micro Focus spent $8.8 billion in 2017 to buy HPE's software which included Autonomy, another British firm the U.S. company had bought in an ill-fated deal five years earlier.

Micro Focus, which manages older software for customers including banks and airlines, said it had no regrets over the HPE deal but that integration problems and issues relating to a new IT system meant its annual revenues could now fall by between 6 to 9 percent.

That compared with previous guidance given in January of a 2-4 percent top-line decline, an outlook which at the time prompted its shares to fall almost 20 percent.

Micro Focus said Chief Executive Chris Hsu had quit and would be replaced by chief operating officer, Stephen Murdoch.

"We remain confident in Micro Focus' strategy whilst recognising that operational issues have led to a disappointing short term performance and outlook," Executive Chairman Kevin Loosemore said.

He told Reuters the group's balance sheet remained strong and its dividend policy would not change, but he accepted the group's performance was not acceptable.

Micro Focus, with a market capitalisation of 4.45 billion pounds ($6 billion) before the deal, has been a serial acquirer of software platforms.

The purchase of HPE thrust it into the top ranks of European software makers, ranking around sixth in market capitalisation terms among regional software names at the time of the deal.

The company's clients pay it to extend the life of computers they use to run their businesses, for example to manage data, allowing them to avoid spending on newer computer systems.

It said on Monday it had had issues with the implementation of a new IT system which had affected the running of its sales team, particularly in North America. It had also seen lower than expected licence income.

The group said however it expected revenue in the first half of the year to be down between 9 and 12 percent, meaning it expects the second half to be better.

Analysts at Numis cut their core earnings forecast by 10-14 percent. "Management believes fundamental thesis of HPE deal is intact, albeit it may be a "good deal" rather than a "great deal," they said. (Reporting by Kate Holton Editing by Guy Faulconbridge and Keith Weir)