Tech stock crashes 45% after CEO resigns

Shares in Micro Focus plummeted on Monday after the UK tech company warned of falling sales and said its CEO was leav...

Posted: Mar 19, 2018 3:52 PM
Updated: Mar 19, 2018 3:52 PM

Shares in Micro Focus plummeted on Monday after the UK tech company warned of falling sales and said its CEO was leaving after six months on the job.

A dramatic stock decline of 45% wiped -4.4 billion ($6.3 billion) off the company's market value in London. Shares had crashed as much as 59% in early trading.

The firm said that it was struggling to integrate the software division of Hewlett-Packard Enterprise, which it purchased last year for $8.8 billion. It said the rocky transition had caused salespeople to quit.

Micro Focus, which helps clients manage their software systems and prevent cyberattacks, said it expects sales to drop by as much as 9% during the current financial year. It had previously forecast a decline of 2% to 4%.

The company also said that chief executive Chris Hsu, who joined from Hewlett-Packard Enterprise, would be leaving immediately to "spend more time with his family and pursue another opportunity."

Micro Focus said its current chief operating officer, Stephen Murdoch, would take over as CEO.

Related: Why is L'Oreal buying a technology company?

There were already some warning signs before Monday's crash.

Paul Moran, an analyst at Northern Trust Capital Markets, cut his outlook for the company last week, saying it was lagging competitors in the critical area of artificial intelligence.

He said that Micro Focus had built a reputation for buying companies, then cutting costs and improving their profitability. But it had fallen short on innovative ideas and growth, two key factors for most tech firms.

Research firm Gartner had another critique in 2016: It said that Micro Focus had focused too much on "aggressive" sales tactics such as upgrade charges that hurt customer satisfaction. Its corporate clients include Comcast, BMW, AIG and Siemens.

Micro Focus did not immediately respond to a request for comment on Monday.

Related: Tinder sues dating app Bumble

The Micro Focus deal is the latest in a series of problematic transactions involving Hewlett-Packard, which split into two companies -- HP Inc and Hewlett Packard Enterprise -- in 2015.

Hewlett-Packard's $11 billion acquisition of software maker Autonomy in 2011 turned into a disaster. HP ended up writing down nearly $9 billion of Autonomy's value, claiming the UK company had falsified its financial statements. (Autonomy founder Mike Lynch has always denied the claims.) Some Autonomy assets were later incorporated into the software division purchased by Micro Focus.

Hewlett-Packard's $19 billion purchase of Compaq in 2002 is considered one of the worst in the history of tech.

Minnesota Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 88721

Reported Deaths: 2015
CountyConfirmedDeaths
Hennepin25628921
Ramsey10410318
Dakota7048125
Anoka5664132
Stearns371523
Washington352655
Scott238633
Olmsted226327
Nobles192616
Blue Earth15786
Wright15087
Carver13307
St. Louis131733
Rice12978
Mower12744
Clay123240
Sherburne107814
Kandiyohi9182
Winona84318
Lyon6384
Steele5162
Freeborn5113
Benton5003
Watonwan4984
Nicollet49616
Todd4732
Le Sueur4434
McLeod4402
Chisago4331
Waseca4258
Crow Wing41918
Otter Tail3794
Beltrami3714
Goodhue3249
Martin3049
Itasca27113
Polk2704
Isanti2440
Becker2422
Pine2390
Douglas2361
Carlton2351
Cottonwood2160
Pipestone2099
Morrison1951
Dodge1900
Chippewa1891
Unassigned18752
Sibley1763
Meeker1712
Wabasha1700
Brown1682
Murray1522
Yellow Medicine1482
Rock1460
Mille Lacs1413
Faribault1300
Redwood1290
Jackson1281
Renville1256
Cass1233
Swift1111
Roseau1100
Pennington1081
Houston1070
Fillmore1050
Kanabec1038
Koochiching1033
Lincoln1010
Stevens911
Pope860
Hubbard760
Aitkin701
Big Stone660
Wadena620
Grant574
Wilkin553
Lake530
Norman510
Marshall481
Mahnomen451
Lac qui Parle430
Red Lake370
Traverse290
Clearwater250
Lake of the Woods201
Kittson120
Cook60

Iowa Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 79506

Reported Deaths: 1256
CountyConfirmedDeaths
Polk15227256
Johnson498527
Woodbury494461
Black Hawk433686
Linn3762106
Story327917
Scott276527
Dubuque276040
Dallas267538
Pottawattamie197637
Buena Vista194112
Marshall175934
Sioux13203
Wapello125757
Webster118914
Clinton106218
Muscatine106052
Plymouth103420
Crawford9944
Cerro Gordo99321
Warren9276
Jasper75632
Des Moines7377
Marion7074
Tama68731
Carroll6305
Henry6034
Lee5947
Wright5621
Dickinson4836
Bremer4637
Boone4627
Washington43011
Louisa42515
Mahaska33619
Franklin33517
Delaware3293
Hamilton3143
Floyd2963
Jackson2963
Winneshiek2935
Clay2883
Benton2811
Hardin2761
Winnebago26611
Butler2582
Clarke2553
Emmet25210
Jones2433
Poweshiek2438
Allamakee2425
Shelby2421
Lyon2413
Buchanan2351
Clayton2303
Cedar2191
Guthrie2175
Kossuth2170
Sac2090
Chickasaw2070
Grundy2012
Madison2012
Fayette1871
Cherokee1852
Howard1825
Iowa1821
Mitchell1810
Harrison1772
Hancock1722
Humboldt1713
Calhoun1692
Mills1651
Palo Alto1590
Pocahontas1512
Monroe14610
Page1410
Lucas1386
Jefferson1331
Monona1321
Cass1292
Osceola1250
Appanoose1203
Union1203
Taylor1191
Davis1134
Van Buren1091
Worth1020
Ida960
Keokuk901
Montgomery865
Greene840
Fremont820
Wayne812
Adair641
Audubon591
Decatur580
Ringgold412
Adams280
Unassigned230
Rochester
Clear
50° wxIcon
Hi: 71° Lo: 54°
Feels Like: 50°
Mason City
Clear
48° wxIcon
Hi: 75° Lo: 53°
Feels Like: 44°
Albert Lea
Clear
52° wxIcon
Hi: 74° Lo: 55°
Feels Like: 52°
Austin
Clear
50° wxIcon
Hi: 73° Lo: 54°
Feels Like: 50°
Charles City
Clear
48° wxIcon
Hi: 73° Lo: 52°
Feels Like: 44°
Warmer Weather Ahead
KIMT Radar
KIMT Eye in the sky

Latest Video

Image

Saturday Weather

Image

What are the benefits of bringing football back to Minnesota this fall?

Image

Candlelight vigil for Prisoners of War

Image

MC Masters National Championship Regatta

Image

Early voting begins in Minnesota

Image

Dooley's Pub closes due to health hazards

Image

Area athletic directors prep to welcome back sports

Image

Early voting begins in Minnesota

Image

TikTok Ban to Begin This Weekend

Image

Sara's Evening Forecast - Friday

Community Events