Micro Focus International says second-half revenue forecasts will be "modestly exceeded". The mainframe software supplier's shares nudged up 2 per cent on its third-quarter trading statement as analysts increased their revenue forecasts marginally to around $220m (£113m).
Micro Focus also looked to address that currency effects - particularly the strengthening dollar - were flattering its results. The statement says that it expects to achieve double-digit organic growth in the year to April 2008, excluding exchange-rate movements. Cash earnings margins will be flat on the first half at 38.4 per cent.
"Forecasts look conservative and, if a general slowdown doesn't hit [in the first half of calendar 2008], Micro Focus will be upgrading again in early May," says Evolution analyst Roger Phillips. "But the US focus, business model and 35 per cent of the share capital in waiting [belonging to venture backer Golden Gate] suggests that real buying interest [from investors] will be limited."
The market was surprised in early January by the sudden departure of Micro Focus's chief operating officer, Mike Shinya. Mr Shinya was responsible for Micro Focus's sales operations, so shareholders will be relieved that sales do not seem to have been affected. However, stronger upgrade momentum may be required to restore the shares to their previous premium rating, now that they trade in line with the software sector.
"The key question centres on the scope to maintain organic growth into [fiscal] 2009," say analysts at Jefferies, "given the potentially worsening macro environment, and the likelihood of further acquisitions within, we believe, only months." Jefferies expect earnings of 30c in 2008 and 31c in 2009.
