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At this depressed price, even the slashed divi is now an attractive yield...
to £3.50 so we can all buy some more.
It does have big upside at some point. Sadly that is possibly 2 years away. This is because Licence sales = Maintenance Revenue = Consulting fees. We do not know the time lag between licence sales and the rolling up of revenue which is 1.9 billion of its revenue. If you sell 1 licence and buy 5 years maintenance then it might take 2-3 years of good licence sales before revenue in maintenance is growing. Thats why FY2023 is slated as stabilisation but if you read the report client retention still sucks so that could slip to 2024 FY. Vertica delivered 15.8% licence growth but maintenance still down massive. Vertica has grown YOY none stop so why is maintenance down then? This is the rot inside the business they need to stop because 1.9 billion of its revenue comes directly from maintenance and thats where the problem is. Its a gamble right now because all they have done is lost less than they did before and thats why SP is 14% down. Im not a deramper im just realist about this stock. Buy for the 5% dividend and hold for the growth over 5-10 years. Its just hard to think 5-10 years when they dont explain anthing about AWS.
What are you talking about panda?
We all new the results but don’t forget about aws deal which should start to materialise in fy 22.
Also with management buy in this still has big potential upside... imo.
They work is a high growth high profit margin industry yet revenue keeps declining...... Something is seriously wrong with MCRO.... They need to sack senior management and bring in a new team.... Or we need some activist investor on board who can unlock value.... No wonder why PEs are so successful in their return... Its becoz of such senior managements who are in majority across industry with uni degree but no grip on business... No wonder start ups r so successful as they complete against these **** business graduates without much clue of business...
at 2.38 this share was worth a gamble. At 4.50 not so much if you want short term gains. Maybe in 24 months it will be worth more
Just considering the immediate term.... Given the fact that thr shares don't go ex-D until 10th March and the dividend is approx 15p and for arguments sakes the SP is 400p, that would give you a return of 3.75%, which may not be GREAT, but is certainly better than any BS???
Got sucked into this share far too early thinking the signs were there that the company was turning...
The problem with cost savings is that they dont explain what costs they are saving. If there is 3 people doing the job of 1 now the new IT system is online then that will be good but the reality is that these headcount reductions always come with client stress. Im still faithful that 5 years this stock will be multi bagger from my initial investment but they really need to put some good news out for once. The only explanation i have is that they are all collecting cheap stock whilst cheap SP and in 5 years time they will all be laughing. High SP today means less profit for them in future.
Microfocus needs a change at the top asap, they have taken the business as far as they can and now a change is what it needs just my view as a shareholder.
Topped up 1st tranche few from my 464p sale - nice dividend to collect in the meantime. Adding more on further drops. Overdone esp if retest of old lows.
Pandamonia: "I dont like cost savings because it usually means a job that was done yesterday is now not being done by someone".
Or a job that was previously being done in three different ways by three people, in the US, UK and Ireland can now, thanks to a single process & technology stack, be done by one person in Bangalore.
You buy a perpeptual licence which you own. Then you renew the support when this expires and this depends on length of sale in the original licence order. This is the maintenance part.
If you sell less licences you have less support contracts to renew so revenue reduces. When licence sales increases the maintenance sales will likely increase qs long as retention salea are good. So licence sales increased didn't they?
I work in IT so I understand this very well and I'm fact the teams I manage deliver the renewal parts etc for the licences we purchase for similar services as MCR
The news was out. Check the November update. If in doubt just sell up and move on guys.
Chriss again stop trying to decramp as always. You are the most stupid person I ever experienced and I deal with stupid people all day long
2022 needs to show solid progress to profitability and revenue growth. FY2023 is NOT ok. Im not sure what the management team talks about when they are thinking about doing their day job properly in 2024! The people running vertica are doing a far better job than the rest of them. They should spin it off. the SP doesnt reflect the value of the company but the lack of progress of the management team to stop the bleeding in core businesses. If you cant keep existing customers you better get good at finding new ones.
If the news was known the share price would not be down 12% would it? A big threat to the SP is if the dollar weakens given revenue is in USD and 70% from the states. 20% move in the USD would cost 14% in revenue to the UK. Better hope the Fed raises rates. Im also not sure this maintenance performance has anything to do with licence sales unless they only buy maintenance for a limited time after each licence. Surely someone would maintain for the life of the licence? Also if this was the case why are they focusing on retention? The market is seeing right through that bull **** i think. Maintenance is down because they suck at it currently and offer little reason for people to buy it or keep it long term. Until they fix maintenance and Consultancy which by the looks of it is where all the profit comes from they are going to struggle with the FCF and profit. I still have a 5 year time line on this stock and at least the dividend is half decent for all the pain
Maintenance is tied to licence sales in previous years so of course it reduced...
On SAAS read the commentary which explains they been making changes to the SAAS products.
All the news deported today was out in November but people are too dumb to realise this
I did say that this would be a bad one and another loss. 55m FCF SUCKS. Lots of one time costs again and 200m of one time costs to come to save 300-400m real term cost. I dont like cost savings because it usually means a job that was done yesterday is now not being done by someone and that ends up being negative for the company. I cant get my head around how bad maintenance revenue is for 3 years now. I mean WTF are those people doing to keep losing revenue? Vertica 15.7% growth but nobody cares as usual because the rest of the company is doing that badly. Their SaaS revenue is going backwards not forwards.... i thought SaaS was the new frontier for them? Another total lack of information on AWS or what they think its going to be worth. Very little forward looking information other than for the next 2 years we will lose more of your money and then after that for another 2 years we might grow 1%. - That is why this stock is cheap. With inflation at 7.5% they should see revenue rocketing. Not declining. Their money is worth less next year than today! They are paying 250m a year in interest costs. Thats 1 billion from 2019 to 2023. Find a buyer for those declining sectors and sell them off. The results, the debt and the SP will tank them for it. Because for 2 years all we have is it will be better in 2 years time.
I agree about the CFO section being much more positive and confidently written. I think Murdoch just covers his backside by not being too positive.
Matt they know the current cash position ie from october 31st until today and the cash from the smash deal so I would go with the management confidence statement
I don't know about everybody else, but when I read the report at 7am this morning, it felt as if the CFO's opener was so much more positive from the get go......maybe he should of written Stephen's too! ha ha
Anyway, it's a 'turnaround plan' which is perfectly on schedule and has 2025 written all over it for substantial shareholder value IMO. Well, for those in at these levels anyway...
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FY21 saw us make solid progress across the business.
"I joined Micro Focus because I could see a significant value opportunity. We have many customers in many attractive markets spending record levels on enterprise software. The challenges faced by the Company have been well documented, and a lot of the heavy lifting has been done and we are entering an exciting phase of our development."
Chief Financial Officer's report
Introduction
Since joining in July I have been pleased with the progress made against our strategic objectives, highlights include:
· The rate of constant currency revenue decline has halved year-on-year driven by material improvements in our customer propositions across the product groups, supported by the roll-out of a consistent global sales approach.
· The go-live of the new enterprise-wide platform has meant the transition of our entire employee base to one single IT platform providing a foundation to materially simplify the Group's operations.
· The sale of Digital Safe for $375m demonstrates the value of our portfolio and highlights how improvements made to the underlying assets over the last two years can deliver incremental value to shareholders.
· On 17 January 2022, the Group announced the successful re-financing of approximately $1.6bn. Following the consummation of the transaction, the average maturity of Micro Focus' debt has been extended from 2.7 years to 3.6 years.
My priorities over the next two years are to support Stephen in our delivery of the turnaround of the business which manifests itself in three ways. Firstly, prioritising investment in products to improve our revenue trajectory. Secondly, to utilise our new enterprise-wide platform to reduce the cost of operation. Thirdly, to optimise cash generation and ensure we use our cash efficiently to generate future revenues, reduce debt and continue to pay the dividend.
To this end, on 30 November 2021, the board set out the financial objectives for the business exiting FY23. These are:
· To achieve flat or better revenues;
· To remove c.$400m to c.$500m gross annual costs from the FY21 exit cost base to leave between c.$1.5bn to c.$1.6bn (allowing for cost inflation); and
· To generate an Adjusted free cash flow target of approximately $500m.
We remain on track to deliver against each of these and believe these outcomes will deliver significant value creation for our shareholders.
Statutory results
Story hasn't changed - just investor's expectations which seem to yaw around from month to month. End of the day, you have a highly indebted company which is seeking to to steady the ship. The valuation (PE of 4x) reflects this, so you pay your money and take your choice. This might seem strange coming from a shareholder, but I do question the policy of raising the dividend to c29 when debt remains at such high levels, but you could take that as management confidence.
* Posts FY adj EBITDA $1.04 bln vs $1.19 bln last year, hurt by a decline in annual revenue...
* Lower revenue is due to weakening of the U.S. dollar against most major currencies - co
* Stifel cuts PT to 1158p from 1272p; maintains "buy" rating
* 4 of 8 brokerages rate the stock "buy" or higher and rest at "hold"; their median PT is 500 pence
Ok I will do it then.
If it is any consolation someone is taking advantage of the price drop. Some very significant buys going through
anyone !!!
50ema adi 200 ema pretty much the same at 421p. If the SP can hold this by end of day I would call that a success!