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Fix-it merchant Micro Focus reclaims Hewlett Packard Enterprise Fix-it merchant Micro Focus reclaims Hewlett Packard Enterprise
(about 2 hours later)
You won’t find the word “Autonomy” anywhere in Micro Focus’ 27-page announcement of its $8.8bn (£6.6bn) deal to take control of Hewlett Packard Enterprise’s software division. The UK’s newest technology champion isn’t exactly crowing about reclaiming for the nation bits and pieces of a former famous member of the FTSE 100 index.You won’t find the word “Autonomy” anywhere in Micro Focus’ 27-page announcement of its $8.8bn (£6.6bn) deal to take control of Hewlett Packard Enterprise’s software division. The UK’s newest technology champion isn’t exactly crowing about reclaiming for the nation bits and pieces of a former famous member of the FTSE 100 index.
The omission was wise. First, Hewlett-Packard’s $11bn purchase of Cambridge-based Autonomy in 2011 was the deal that precipitated crisis and write-offs at the US firm. The litigation continues, so best for Micro Focus to ensure it has the right legal protections in place and skirt around the contested claims. The omission was wise. First, Hewlett-Packard’s $11bn purchase of Cambridge-based Autonomy in 2011 was the deal that precipitated crises and write-offs at the US firm. The litigation continues, so best for Micro Focus to ensure it has the right legal protections in place and skirt around the contested claims.
Second, old Autonomy is unrecognisable today. Many of its products for searching unstructured data have been incorporated into HPE’s software offering. The Autonomy-related stuff represents only about a fifth of HPE’s software division.Second, old Autonomy is unrecognisable today. Many of its products for searching unstructured data have been incorporated into HPE’s software offering. The Autonomy-related stuff represents only about a fifth of HPE’s software division.
Third, it would be misleading for Micro Focus to invoke the thrills and spills of the Autonomy era. Its own style is as dull as its name. Micro Focus occupies the unglamorous end of the technology industry where the money is made by managing and updating legacy infrastructure. It is a fix-it merchant, rather than a pioneer. Third, it would be misleading for Micro Focus to invoke the thrills and spills of the Autonomy era. Its own style is as dull as its name. Micro Focus occupies the unglamorous end of the technology industry, where the money is made by managing and updating legacy infrastructure. It is a fix-it merchant rather than a pioneer.
There’s no shame in that, of course, especially when your recent record is as impressive as Micro Focus’s: the share price was 300p in 2011 and is £22 now, up 15% on Thursday as investors applauded the swoop on a chunk of HPE.There’s no shame in that, of course, especially when your recent record is as impressive as Micro Focus’s: the share price was 300p in 2011 and is £22 now, up 15% on Thursday as investors applauded the swoop on a chunk of HPE.
Enthusiasm is the right reaction if you believe scrutiny under the Micro Focus lens can turn profit margins at the newly-arriving business from 21% to 46% within three years. That’s the promise from executive chairman Kevin Loosemore, who can point to similar surgery performed on past acquisitions. Enthusiasm is the right reaction if you believe scrutiny under the Micro Focus lens can turn profit margins at the business from 21% to 46% within three years. That’s the promise from executive chairman Kevin Loosemore, who can point to similar surgery performed on past acquisitions.
The difference this time is size. Micro Focus is grabbing control of a business bigger than itself. It is a £5bn ($7bn) company making a $8.8bn deal. The complexities will inevitably be greater, but let’s not knock the ambition. Loosemore & co have earned the right to play on a global stage and, after the dispiriting sale of ARM Holdings to SoftBank for £24bn, it’s good that a UK tech company can step up. A dull, but very worthy, deal. The difference this time is size. Micro Focus is grabbing control of a business bigger than itself. It is a £5bn ($7bn) company making a $8.8bn deal. The complexities will inevitably be greater, but let’s not knock the ambition. Loosemore and co have earned the right to play on a global stage and, after the dispiriting sale of ARM Holdings to SoftBank for £24bn, it’s good that a UK tech company can step up. A dull, but very worthy, deal.
Osborne’s grand folly HS2 could be hitting the skidsOsborne’s grand folly HS2 could be hitting the skids
“Often it is modest, rapidly deliverable investments that can have the most immediate impact, particularly on the road network, but also in some places on the rail network,” said Philip Hammond on Thursday.“Often it is modest, rapidly deliverable investments that can have the most immediate impact, particularly on the road network, but also in some places on the rail network,” said Philip Hammond on Thursday.
Was the chancellor hinting that HS2 will be ditched? Let’s hope so. The economics of the proposed high-speed railway look more grotesque every time the sums are totted up. Nigel Wilson, chief executive of Legal & General, one of the UK’s biggest investors in infrastruture, said the other day that he wouldn’t dispatch a penny to HS2 because it is of “little economic benefit.” Was the chancellor hinting that HS2 will be ditched? Let’s hope so. The economics of the proposed high-speed railway look more grotesque every time the sums are totted up. Nigel Wilson, chief executive of Legal & General, one of the UK’s biggest investors in infrastructure, said the other day that he wouldn’t dispatch a penny to HS2 because it is of “little economic benefit”.
In reply to a follow-up question from former Labour chancellor Alistair Darling, Hammond said he is a great believer in the “Eddington principle” that modest, easily-deliverable projects are often the most worthwhile. In reply to a follow-up question from the former Labour chancellor Alistair Darling, Hammond said he is a great believer in the “Eddington principle” that modest, easily deliverable projects are often the most worthwhile.
Sir Rod Eddington, former boss of British Airways, wrote a report in 2006 for Darling, transport secretary at the time. Simon Jenkins’ long read on HS2 in this paper in June reminded us what it said: transport policy “needs to avoid wasting time and money pursuing alluring new super high-speed motorway or rail networks or pursuing grands projets with speculative returns.”Sir Rod Eddington, former boss of British Airways, wrote a report in 2006 for Darling, transport secretary at the time. Simon Jenkins’ long read on HS2 in this paper in June reminded us what it said: transport policy “needs to avoid wasting time and money pursuing alluring new super high-speed motorway or rail networks or pursuing grands projets with speculative returns.”
Go for it, chancellor: ditch George Osborne’s grand folly.Go for it, chancellor: ditch George Osborne’s grand folly.
Time for Sports Direct to spread the profitsTime for Sports Direct to spread the profits
One reason why Mike Ashley burns with resentment about the exposure of pay and working practices in Sports Direct’s Shirebrook warehouse may be that, in another corner of the business, his bonus arrangements for a couple of thousand permanent staff has been remarkably generous over the years.One reason why Mike Ashley burns with resentment about the exposure of pay and working practices in Sports Direct’s Shirebrook warehouse may be that, in another corner of the business, his bonus arrangements for a couple of thousand permanent staff has been remarkably generous over the years.
A few years ago Sports Direct was being lauded for a scheme whereby some employees, mostly in the stores and head office, were scooping tens of thousands of pounds. In 2013, a lucky – or hard-working – 2,000 staff shared a £100m payout in the form of Sports Direct stock. In total, £250m has been distributed this way, as Ashley often likes to point out.A few years ago Sports Direct was being lauded for a scheme whereby some employees, mostly in the stores and head office, were scooping tens of thousands of pounds. In 2013, a lucky – or hard-working – 2,000 staff shared a £100m payout in the form of Sports Direct stock. In total, £250m has been distributed this way, as Ashley often likes to point out.
The contrast between the treatment of permanent staff and those on zero-hours and agency contracts is stark. But, if Ashley is serious about reform, one idea should be obvious: distribute the spoils more evenly.The contrast between the treatment of permanent staff and those on zero-hours and agency contracts is stark. But, if Ashley is serious about reform, one idea should be obvious: distribute the spoils more evenly.
Ashley used to say he wanted Sports Direct to be more like John Lewis (before alighting on Selfridges this week) and the bonus system at the employee-owned department store is worth studying: payments are declared annually as a percentage of salary.Ashley used to say he wanted Sports Direct to be more like John Lewis (before alighting on Selfridges this week) and the bonus system at the employee-owned department store is worth studying: payments are declared annually as a percentage of salary.
To work in practice at Sports Direct, many zero-hours and agency workers would have to join the regular payroll; at the moment, only 5,000 out of 27,000 staff are permanent full or part-time employees. But, since Ashley says wants to boost the ratio of permanent employees, the stars could align. To work in practice at Sports Direct, many zero-hours and agency workers would have to join the regular payroll; at the moment, only 5,000 out of 27,000 staff are permanent full- or part-time employees. But, since Ashley says wants to boost the ratio of permanent employees, the stars could align.
If Sports Direct was regularly distributing equally, say, 10% of its profits to, say, 20,000 staff, public perceptions might alter. The governance grumbles would still have to addressed, of course. But a fairer company-wide bonus scheme would be a start. Ashley, if he wanted to be outrageously cheeky, could even describe it as the logical extension of his original thinking.If Sports Direct was regularly distributing equally, say, 10% of its profits to, say, 20,000 staff, public perceptions might alter. The governance grumbles would still have to addressed, of course. But a fairer company-wide bonus scheme would be a start. Ashley, if he wanted to be outrageously cheeky, could even describe it as the logical extension of his original thinking.