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By | Paul Kunert 10th April 2015 15:53

Micro Focus guillotine will fall more frequently on Novell necks

Cost-cutting hits GroupWise, Open Enterprise Server and Filr

Novell seems to be bearing the brunt of the mammoth restructuring that parent company Micro Focus is currently executing, say our sources close to the situation.

This week, Micro Focus issued a profit warning based on the strengthening dollar and went public on a review of the group – trading brands include The Attachmate Group (TAG), Novell, SUSE, NetIQ and Micro Focus.

TAG was acquired last September in a deal that was valued at $2.3bn before costs were factored into the equation, so this type of integration work was always on the cards.

Management said the business is chugging along in line with October’s guidance of $1.33bn for the fiscal ’15, and adjusted EBITDA of $500m, but the Brit Pound has since weakened 7.4 per cent in relation to the dollar, while the Euro and the Japanese Yen are down 15.7 and 13 per cent against the dollar respectively.

Based on this, full-year turnover is likely to fall to $1.24bn and “underlying adjusted” EBITDA will reduce to circa $470m.

The Linux and Open Source wares will remain under the control of Nils Brauckmann, as president and GM for SUSE, and headcount is growing in development, customer services and marketing.

The rest of the portfolio will be managed by Micro Focus COO Stephen Murdoch, with each product group said to have its own strategy, target market and growth profile. As a result, certain product groups will be consolidated where there is overlap, including hosting connectivity.

“As part of the restructuring we will be reducing the number of office locations from 126 to close to approximately 90 by April 2016; we will simplify the number of legal entities; we will consolidate our IT systems and commerce consultation on a move from distributed processing to dedicated shares centres,” said Micro Focus in a statement.

There will be a gross reduction in headcount of 500, but an additional 150 people were brought into the business, leaving net job losses at 7.5 per cent of the workforce. Some 4,641 people were employed as of November.

TAG senior execs, Charles Sansbury (COO), Jay Gardner (president and GM at NetIQ) and Kathleen Owens (president and GM at Attachmate and Novell) have “decided to leave to pursue other interests” following the integration review.

Sources close to the restructure tell us the old workgroup business – Novell GroupWise, Open Enterprise Server/Netware, Filr – have been most impacted by the job cuts.

“Development, quality assurance, support and sales have been hit, for example the entire QA team for Open Enterprise Server has been cut and all QA is now in Bangalore,” our source said.

It seems that Endpoint Security and Configuration products were affected significantly as well.

Micro Focus refused to comment beyond its inital statement. ®

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