Those salespeople who earn a lucrative living from persuading companies to abandon legacy systems in favor of the brave new world of client server computing should look at the results of Micro Focus Group Plc and weep. The Mountain View, California and London, England dual headquartered organization is currently achieving phenomenal rates of growth as companies seek to overcome Year 2000 problems. The shares jumped another 8.2% to 622.5 pence as the market absorbed news of a 125% increase in first quarter revenues while income was up 125% to $5.3m. But the company’s perspective stretches far beyond the millennium. We believe that these growth rates confirm our strategy of enabling our customers to continuously transform and renew their legacy enterprise applications for use well into the next century, says president and CEO Martin Walters. With the aid of its tools, Micro Focus says it enables clients to open up code that hasn’t been seen in decades. In doing so, the argument runs, they realize the value of intellectual property at their disposal – and the competitive advantage it gives them. Certainly the strategy of enabling clients to bridge the gap between their old mainframe systems and the modern world of distributed computing, and in particular, web applications, has brought an accelerating stream of revenue. Product revenue is up 65% to $29.5m and operating margins have nearly doubled over the past year to 14.4 percent. Micro Focus remains confident of growth for the remainder of the year. With a $93m pile of cash, the company has been able to push up sales and marketing spending by 60 percent to $19.2m. It looks handily placed for further acquisitions over the coming year. If there is the doubt over the group, it centers on the changing faces around the boardroom table. Ron Forbes, vice president of international finance has just left to pursue family business interests. The company lost CEO Marcelo Gumucio last July (CI No 3,207)and chief financial officer Anthony Miller quit in January in a protest at the limit in share option imposed by institutional shareholders (CI No 3,326). For such a succession of directors to leave at a time of success for the company suggests tensions that must be quickly resolved.
