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@OracleofOldham, my thought was that the combined merger of HPe Software and MicroFocus shouldn't be traded for less than what MicroFocus was traded pre-acquisition. Especially when you see the HP/HPE acquisition history and what was part of HPE Software was bought before that for x3 x4 price (just Autonomy (IDOL) costed 10 billion 3 years before).
However I am now convinced that my logic was flawed, because if a company costs 6 billion and pays for another company 6 billion, the combined price is not 12 billion, since the deal was financed by loans.
Anyway, after the initial 50% drop of the valuation, when I entered the market everything was going great. I stopped monitoring the stock for a while and when I checked it again, it was down bellow my average price, but I never lost hope in the financial masters ready to cut the jobs of the engineers, support and R&D and lead the company to huge profit. This is what WallStreet loves, doesn't it? Wrong... Anyway, I am still positive in the wrong run, just I don't like the explanations of some forum members saying that because Amazon mentions MCRO in a blog post, the stock price should double in no time. Bull****.
Vertica has never been a leader, but a niche player. If I am looking for column based db, I would personally go for SAP HANA. But this product definitely fits in the MCRO strategy of being low maintenance and license cow. Autonomy with its IDOL is a fraud from the beginning. I've seen it working only when using the support ticketing system in MicroFocus, after years of implementation. It was written down in HP and Sushovan Hussain went to prison for the lies they sold Autonomy with.
Mark, what is your average price, to know when are you going to start crying?
latpulldown, what is the connection of MCRO with Scotland? Why the FTSE didn't go down? I love the explanations of financial "experts".
I would say "I told you so", but I am just grumpy ex-employee, who doesn't know anything from looking the daily moves of this stock for the last 3 years.
>You've hit the nail on the head. People taking profits in a panic rather than adopting a long term approach for maximum gain
welcome to financial markets 101
well Christmas is next week, the period before Christmas is always optimistic and even with all the optimism, the stock is not going up. January will be Armageddon. Hard Brexit, Covid records, bankruptcies ...
I will wait to 350. What I've learned so far is that when the UK market goes down 0.5%, this share goes down 2%. When the market goes up 0.5% this stays at 0%.
>So far MarkBell has predicted a lot of things correct on MCRO.
Even the broken clock is right two times per day.
>'no news' for this stock means slowly going down.
I think I told you guys, but the math genious Mark didn't get it
@Oculusprime I cannot believe in today's market there can be company with such a lot P/E ratio. So yes, I am positive that it will return. COBOL/Mainframe apps are still there and they cannot be easily replaced. There are also still customers of the HPE software, even though decreasing. So I believe with return of the confidence, the cost can be back to 12-14GBP.
@Bobsto12 look for "professional services". In form-10-hpe-seattle-micro-focus-spin-08-10-17.pdf, the net revenue of the software division in 2016,2015 and 2014 was between 3 and 4 billion usd, and the prof services (consulting) was about 12% of it - 400 million. The profit was not big, but as I said this department was assuring the sales of licenses continue.
@Bobsto12 I am pretty sure in the HPE financial report of 2016 the figure for Software consulting was different and probably you are not looking at the right column. The utilization was good in the teams and 55 million was just the cost of 2-3 big deals out of hundreds.
@Oculusprime I remember early 2018 when the MF stocks felt with 70%. My logic to enter the market then was that the combined company, which was evaluated for 12 billion GBP 6 months earlier, cannot be traded for less than each separate part. Then I entered the market on average at 11-12 GBP, because even if the software of HPE to be in ****, the COBOL legacy business hasn't changed. However look where are we now today. I have no other choice than to wait and hope for a miracle, because I cannot sell my portfolio with such a loss. HODL.
@Marko61 - many of the tools are still great, even though they were not actively developed and innovated. The problem is not the software, but the lost of confidence in the company. Nobody wants to invest into solutions in company, which has gone south.
exactly this is how MF saw raising their margin - huge consulting workforce of about 3000 highly paid people, who were responsible for small amount of the revenue. But these were the people, because of whom the licenses were sold. The HPE enterprise software is not something to install and forget such as a database. It is more similar to ERP systems - it requires complex intrgrations and customizations to match customer expectations. When there is nobody to sell it to you or tell you how to implement it, you cannot use it. When MF also ruins the support experience, sooner or later the customers started moving to the competition. And if you get new people in the company, they need years to get to the level of the old experts who left.
exactly this is how MF saw raising their margin - huge consulting workforce of about 3000 highly paid people, who were responsible for small amount of the revenue. But these were the people, because of whom the licenses were sold. The HPE enterprise software is not something to install and forget such as a database. It is more similar to ERP systems - it requires complex intrgrations and customizations to match customer expectations. When there is nobody to sell it to you or tell you how to implement it, you cannot use it. When MF also ruins the support experience, sooner or later the customers started moving to the competition. And if you get new people in the company, they need years to get to the level of the old experts who left.
@MarkBellUK I bet you are a millionaire with such math skills.
@pandamonia just to add something more on the business model. MF's idea was indeed to change it, by removing the consultancy fees and profit for licensing. But their execution was very bad. Most of the customers don't know how to operate well this kind of software (ex-HPE ITSM/ITOM solutions). Customers really need consulting. If they don't get it, they start relying on the support. However the support went from bad to worse. It became partly outsourced as well. When the customers have nobody to whom to ask a simple question, they start to look for different solutions - many of them switched to ServiceNow, which grew for the last three years to $100 billion company. So the HPE Software deal should be mostly written off. MF are not famous with their R&D so in 5 years nothing will change with that department.
@MarkBellUK please tell me master how much GBP was $8.8 billion in 1st of September 2017. or you are more ******ed than I thought anybody here working with money would be. read the British news from then and then go shoot yourself.
@pandamonia everybody is replaceable, no doubt about it. However when almost everybody valuable from HPE quits, there will be nobody left to do the software portfolio, which was bought for 6 billion GBP. This is what happened and this is the reason why company valued for 12+ billion GBP three years ago is valued now at 1.5 billion GBP. As you can see the pockets are not endless and while the AWS partnership is good thing and I hope to recuperate a bit of my losses, it is still not using any of the software acquired by HPE. I really hope that the company would flip. Too many bad and ruthless management decisions have happened so maybe MF have become wiser.
@Fishyboy I am not bitter, I am happy with my decision to leave and these are just the facts. If you can better explain how the valuation of a company goes down 6 times for three years, please do. Trust me, it is not just because the internal systems are not in sync.
@yournamehere - I like how ignorant are some financial people. I am talking about the topic as one of those ex-employees who worked for HP/HPE/MicroFocus for 10 years and I am still involved with the same software as external.
1. $8.8 billion = 6 billion GBP
2. Of course the reason for the downturn is the problematic digestion of HPE Software. Because of it many people, including myself quit the company.
3. There was Stack A (MicroFocus internal systems) and Stack B (HPE internal systems) which after almost three years are now Stack C - the single IT framework you are talking about. This will definitely help. However the valuable people already left. The sales personnel, who was able to sell HPE software is long gone and transitioned to ServiceNow and other competitors. These systems are not just licenses, they require consulting, because implementation of the whole ITIL processes is not easy. MIcroFocus fired a lot of people and now are counting often on incompetent partners and only for the biggest projects are having their internal consultants. This is not the sweet legacy license margin based business of COBOL, etc. If you stop consulting and pushing the customers, they will move to another product. And so they did.
4. MicroFocus were praised by AWS, because they built a whole workflow of how to move the services, running on Mainframes to AWS. This is not SaaS. Check your terminology.
I am definitely long, at least because I am holding my stocks, which I bought when the price was 3 times the current one. A company should not have such low p/e ratio. However I understand why shorts took their gains. MicroFocus bought the HPE Software business for 6 billion and then sent it to scrap. All the good experts from ex-HPE left, the sale force also left and the current customer base started looking into alternatives such as ServiceNow. Instead of betting on SaaS, MicroFocus decided to go to Kubernetes and microservices, which so far is a loosing strategy.
I've been watching the stocks for 5 years. I don't feel so positive as most of the commenters. First, because the stocks is mostly following the market unless there is some stock news. Brexit is coming. Next financial news are in February. So until February there is nothing to change in order to urge the investors to buy it again. 'no news' for this stock means slowly going down.