Tech giant Micro Focus suffers £2bn outage as shares crash

Tech giant Micro Focus went into meltdown on Thursday after stunning investors with a shock warning that sales will be worse than expected, wiping £2 billion off the FTSE 100 giant.

In an unscheduled update to the market, the software supplier said sales will fall by up to 8%, rather than the 6% promised in July, sending shares crashing 30% to 1067p.

Micro Focus, which grinds out profits by offering old IT systems to businesses, is unusual because it wants revenues to fall less slowly rather than grow them.

The tech firm, Britain’s biggest, has struggled to integrate a $8.8 billion HPE software deal signed in 2016.

Thursday is the second time Micro Focus has been forced to scrap forecasts after a shock profit warning in March 2018 sent shares spiralling 50%.

Poor performance from salesmen, who failed to sell enough software, plus a string of economic problems — such as Brexit, slowing European growth and trade wars — were behind the slowdown.

The company has launched a strategic review to overhaul the business, which prompted further questions over where the company goes next.

“Investors are likely to question whether the strategic review itself implies issues are likely to take some time to resolve,” said Barclays analysts.

Ian Forrest at The Share Centre said: “The words ‘strategic review’ rarely spell good news for investors so it wasn’t surprising to see the shares respond with a drop of 30% in early trading.”

The review is expected to put everything on the table, including doing more deals to dilute the ill-effects of the HPE deal, selling some assets or possibly even putting itself up for sale.