Shares in Micro Focus International dived more than 17% after the British software group said it had completed a business review and announced the departure of its executive chairman after 15 years.
Kevin Loosemore helped grow Micro Focus MCRO, -22.27% from a small software company based in the market town of Newbury, England, into Britain’s biggest listed technology company by buying legacy technology that companies need to run core operations.
The company’s stock has plunged by more than 60% since it issued a stark profit warning in August as it struggled to integrate its $8.8 billion takeover of the software business of U.S.-based Hewlett Packard Enterprises HPE, +1.98% in September 2017. The company was ejected from the FTSE 100 and moved to the FTSE 250 last year.
Traders sent shares in Micro Focus down 17.44% to 814.5 pence at 12:01 GMT on Tuesday.
Greg Lock, a former chairman of Computercenter CCC, +2.20% , will take up the role of nonexecutive chairman on Feb. 14.
The departure of Loosemore was announced as Micro Focus said the company needs investments of between $70 million and $80 million in security and Big Data products in each of the next two fiscal years.
The software provider’s revenue plunged 30% to $3.3 billion in the year ending Oct. 31, 2019, and it recorded a loss of $34.1 million from continuing operations for the period. It said it doesn’t expect performance to improve until 2021.
Stephen Murdoch, Micro Focus’s chief executive officer, said: “This has been a challenging year for Micro Focus, and our overall financial performance fell short of expectations. As a result, we conducted a strategic [and] operational review, which has identified the additional actions and changes required to deliver on the significant potential within the business.”
Russ Mould, investment director at AJ Bell, said: “It has certainly not all been smooth sailing over that time, but the recent problems can be traced back to the multibillion-dollar acquisition of HP Enterprise in 2017. The company has really struggled with the integration of this business, and it looks to be firmly in the category of deals which have destroyed rather than created shareholder value.”
He added: “There is speculation after last summer’s major profit warning and the resulting strategic review that the company might be up for sale. Loosemore’s departure would seem only to make it more vulnerable to an opportunistic bid.”