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Lower profits blow to Micro Focus shares: Revenue growth fails to meet targets

SHARES in Micro Focus, the computer software company, fell 30p to 970p yesterday after its announcement of lower pre-tax profits and earnings per share. They had peaked at pounds 28.98 in February.

Revenues rose from pounds 68.9m to pounds 83.8m, with about 60 per cent of turnover in the US. However, profits before tax fell from pounds 22.8m to pounds 21.8m. The company said costs had increased as expected but revenue growth failed to meet targets.

The shortfall was due to disappointing sales of the company's software for IBM mainframes, which used to be the mainstay of its business but now accounts for less than half of turnover.

Paul O'Grady, chairman, said: 'Although IBM's problems have not helped us, we do not depend on IBM.'

Micro has brought back its retired founder, Brian Reynolds, as joint chief executive with Mr O'Grady, who said: 'Brian sees the opportunities we have and thinks he can make a difference.'

The company has also appointed Harold Hughes, corporate vice-president of Intel, to the board. In addition to the management changes it has redirected its sales effort from computer programmers to the senior managers in information technology departments. It said it had also ironed out problems that led to complaints about customer support earlier last year.

Earnings per share, fully diluted, fell from 106.5p to 101.2p. The company, in line with its normal practice, did not recommend a dividend.