Shares in Micro Focus fell on Friday after the software company announced the departure of Nigel Clifford, chief executive, after less than a year in the job.
Kevin Loosemore, non-executive chairman since 2005, will take on Mr Clifford’s duties and become executive chairman. Mr Loosemore’s appointment was a permanent one, the company said.
In the 11 months after he joined from Nokia last May, Mr Clifford presided over a 41 per cent fall in the share price of Micro Focus, which updates ageing computer systems and provides automated software testing. The company was hit last year by lost contracts in the US, as clients cut back on spending.
There has been speculation in recent months that Micro Focus could be a takeover target for IBM or SAP. In February, the company warned that earnings for the year to April would be about 10 per cent lower than analysts had expected.
Analysts at UBS said they did not expect a change of strategy at the company.
“While we believe Clifford inherited a difficult position, with management turmoil and acquisition integration challenges to deal with from day one, we expect investors will see Loosemore’s long-standing involvement with the business and strong leadership skills as welcome,” they said in a research note. UBS retained its “buy” rating on Micro Focus.
However, Jonathan Imlah, an analyst at Collins Stewart, said the outlook for the company was gloomy. Micro Focus’s core focus, servicing systems based on the increasingly unfashionable Cobol programming language, had an end market with a “flat to negative” growth profile, he said.
In attempting to break into the software testing market, he added, it was dwarfed by the dominant pair of Hewlett-Packard and IBM.
“There’s no obvious way out of the current quandary,” he said.
Micro Focus made no change to its February guidance, which forecast sales of $434m-$442m, and adjusted earnings of $141m-$153m before interest, tax, depreciation and amortisation. The previous year’s revenue was $432.6m, with adjusted ebitda of $173.3m.
Mr Loosemore said: “My immediate priority is to deliver the year-end in line with shareholder expectations.”
Micro Focus shares fell 7.75 per cent to 291.8p, valuing the company at about £586m.