Together, HPE and Micro Focus, with a highly complementary portfolio, are positioned to form one of the largest pure-play software companies, according to HPE.
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For its fourth quarter, HPE forecast earnings, excluding one-time items, of 58 cents to 63 cents a share, while analysts had forecast HPE to earn 60 cents a share for the quarter that ends in October. It pulled in third quarter revenue of £552 million (~$738 million), a dramatic 18 percent year-on-year decline.
(HPE) announced Wednesday that it will spin off its software assets division and merge it with the United Kingdom -based Micro Focus International Plc in a deal worth $8.8 billion.
As in that deal, HPE shareholders would retain a stake in the merged company – 50.1 percent. Cash flow from operations grew 10 percent to Dollars 1.7 billion.
Revenue slipped about 6 percent year-on-year to US$12.21 billion.
A quick analysis suggests that Micro Focus, which provides software and consultancy services for clients updating legacy systems to more modern platforms, may even be the biggest United Kingdom software company by revenue. The adjusted forecast excludes gains from divestments of United States dollars 1.42 and restructuring costs of USD 1.23 per share.
Micro Focus said the deal with HP was “wholly consistent with the long-term business strategy we have been pursuing to be the most disciplined global provider of infrastructure software”. “Software is still a key enabler of our go-forward strategy, but we need the right assets to win in our target markets”.
Micro Focus specializes in software that works with older systems companies now use, Mr. Loosemore said in an interview.
He continued: “We have total control of what is happening”.
The assets that Micro Focus will acquire include what remains of British company Autonomy, a purchase made by HPE in 2011.
The proposed merger brings together two enterprise software vendors, with revenues of approximately $4.5 billion.
Hewlett Packard Enterprise Co. was spun-off from the Hewlett-Packard Company in November 2015.
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HPE’s shares were off by nearly 2 percent in after-hours trading after the release of the company’s results and software spin-off plan. The company operates in four segments: Enterprise Services, Enterprise Group, Software, and Financial Services.
