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March 7, 1997updated 05 Sep 2016 12:59pm

THE BIG TURNAROUND GETS UNDER WAY AT MICRO FOCUS

By CBR Staff Writer

Micro Focus Plc expects its fourth quarter to be generally more buoyant than the rest, but insists that this year’s profitable end to the year is a sign of a real turnaround in the business due to new management and restructuring. The Newbury, UK-based Cobol company that is listed in London and on Nasdaq and now reports primarily in US dollars, saw pre-tax profits of $4.3m – 2.6m pounds, against losses last time of $2.8m – 1.8m pounds, on revenue down 1.2% to $34.9m – 20.8m pounds. In March last year, the management team of Brian Reynolds and Paul O’Grady resigned, and were replaced by Marcelo Gumucio as chief executive and Michael Gullard as chairman (CI No 2,881). Further restructuring, or job losses, cost the company $8m, which it took as a hit in the first quarter of the year. Ron Forbes, vice-president international finance says the second half of the year has seen real and consistent growth, with the fourth quarter in particular showing strong underlying cash flow. He believes the company is now re-focused and ready to start profiting from its market position, which it possibly let slip in the last few years, he admits. Tony Muller, the company’s senior vice-president and chief financial officer says that Gumucio set out a two year recovery plan last year, which included re-focusing on the company’s three main areas of business, Year 2000 fixes, legacy systems and distributed computing. The Millennium is arriving like a life-saver, and Micro Focus should of course be particularly well placed in Year 2000 business, where Cobol skills are at a premium. The company has a Year 2000 division, and offers its Challenge 2000 tool set for identification of Year 2000 problems and implentation of fixes. It says, unsurprisingly, it is already seeing increased revenues from this business.

Stronger, healthier

Muller says the company is beginning to offer consultancy and other services, and has begun active recruitment worldwide to build up this side of its business. He reckons the Year 2000 problem, for which Micro Focus currently provides mainly tools and methodologies, will be a major driver to turn the company into a far more broad-based systems and services company. He accepts Micro Focus is still in a turnaround phase, but is confident that this year will see a stronger, healthier business in a position to go out and grab the opportunities presented by Year 2000, and eventually European Economic & Monetary Union – if it ever happens – as well, although the company is not yet seeing demand for the latter. Muller is certain that we will come out of the Year 2000 business a much different company. Gumucio adds that We look toward 1997 with confidence. We believe Micro Focus has the people, strategies, products and financial strength to serve the growing segments of our markets.

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