Micro Focus struggles to digest its meals

Micro Focus, until recently Britain’s largest listed technology company, lost more than half of its market value last Monday. It warned that sales could shrink more than expected. Chairman Kevin Loosemore said a target of a 2%-4% decline in revenue, offered in January, will not be met. He now expects a decline of 6%-9% this year.

Micro Focus “has followed a roll-up strategy requiring ever more acquisitions”, says Lex in the Financial  Times. “Finally, executing on these purchases has caught it short.” Since 2014 sales have surged fivefold following three large purchases, culminating in the $8.8bn acquisition of Hewlett Packard Enterprise’s software business last autumn.

The troubled history of the recently acquired asset, formerly known as Autonomy, has compounded investors’ concern, says Liam Proud on Breakingviews. After only six months, Micro Focus has also abruptly parted company with Chris Hsu, the chief executive who arrived with the new business.

You might say “upsets happen” in the field of cutting-edge technology, says Nils Pratley in The Guardian. But that’s not Micro Focus’s market. The firm operates in the humdrum, and supposedly lower-risk, field of rewiring legacy software systems. The market reaction was “severe, but so is the credibility deficit at a firm that had previously prospered“ on a diet of much smaller acquisitions. “If you bet the farm, have a bullet-proof plan for integration.”

City talk

“The bookies are smiling,” says James Moore in The Independent. Following the clamour for the government to cut the maximum stake punters can wager through fixed-odds betting terminals (FOBTs) to £2 from the current £100, the industry’s regulator has recommended a cap of £30 or lower.  The number is “seen as a big win for an industry that had been fearing the worst”.  The final decision is now in the hands of the Department for Digital, Culture Media & Sport.

Tax bills always come at a bad time. Just ask Conviviality, the parent of off-licence chains Bargain Booze and  Wine Rack, says Nils Pratley in  The Guardian. A demand for £30m from HMRC, due by the end of this month, has “dropped through its letterbox”.  The sum is equal to more than half this year’s estimated operating profits. If this “suggests Conviviality’s financial controls are a mess”, so did last week’s warning that profits will undershoot forecasts by a fifth. The share price has slumped by two-thirds and trading in the stock has been suspended. Whatever happens next, CEO Diana Hunter (pictured) and chairman David Adams “will surely be out”.

“At last – something to lift the Hammerson share price,” says Alistair Osborne in  The  Times. Yet David  Tyler, chairman of the shopping centres group, isn’t happy. A 615p-a-share bid approach from France’s Klépierre was enough to send Hammerson shares up 24% to 542p. In short, it had a much greater effect than Tyler and CEO David Atkins’s mooted £3.4bn all-share deal to buy rival Intu. Since that offer last December, Hammerson’s shares have gone down from 534p to around 440p. Atkins insists investors love the Intu deal, and rejected Klépierre’s approach in 24 hours. But “the two Daves are yet to prove that Intu’s a better bet”.