Please ensure Javascript is enabled for purposes of website accessibility

Why Micro Focus International Stock Was Slammed Thursday

By Daniel Sparks – Aug 29, 2019 at 12:23PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors were spooked by the infrastructure software company's lowered guidance.

What happened

Shares of infrastructure software company Micro Focus International (MFGP -0.35%) were slammed on Thursday, declining about 32% as of 11:50 a.m. EDT.

The tech stock's decline comes after the company updated its guidance for fiscal year 2019, which ends on Oct. 31. Micro Focus lowered its outlook for revenue during the period. 

A chalkboard sketch of a chart showing a stock price falling

Image source: Getty Images.

So what

Management said that it no longer expects to meet its guidance for constant-currency revenue to decline 4% to 6% year over year for the 12-month period ending Oct. 31, 2019. Instead, management expects constant-currency revenue to fall 6% to 8%.

"Weak sales execution has been compounded by a deteriorating macro environment resulting in more conservatism and longer decision making cycles within our customer base," management said in a press release on Thursday. Management noted it does have "a significant pipeline of business opportunity being pursued," but said it would be difficult to close deals with a meaningful portion of these customers before the fiscal year ends.

Now what

Given this challenging environment, Micro Focus said it is accelerating its strategic review of its business. "This review will focus on what in addition to execution improvements are required to optimise the value of our broad portfolio of products and it will consider a range of strategic, operational and financial alternatives available to the Company," Micro Focus said.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Micro Focus International plc Stock Quote
Micro Focus International plc
$5.70 (-0.35%) $0.02

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.