Results out 6/12/2007/ Promises are positive.

Projected earnings are reasonable.

But DYOH

Collins Stewart note out today:
This mornings pre-close update, brought forward from the scheduled release date of 12 May, will provide much relief. It confirmed that revenue and EBITDA for the year to 30 April will be in line with current market consensus and the range signalled on 15 February ($432-442m of revenue and adjusted EBITDA of $159-167m). Our estimates of $436m and $161m respectively are within this range but we were not alone in worrying that even these numbers might prove a stretch given the execution problems over the past few months. For all its recurring revenue, Micro Focus remains a very back-end weighted business and so hitting the Q4 target, albeit a significantly lowered one from six months ago, must be regarded as welcome news.
Fundamental value vs. takeout value
We believe that this mornings news, combined with the recent, more shareholder-aligned management remuneration structure, warrants an increase in fundamental fair value for Micro Focus. Our target price increases from 321p to 358p accordingly, equating to 10x 2012 earnings. If Bain Capital, or another financial or trade bidder, comes through with a formal offer for Micro Focus, we believe that more than 425p, or 8x 2012 EBITDA, would be a bonus. Given the lack of growth and structural issues, we do not expect a bidding war but recent M&A activity suggests that rational expectations are often irrelevant. In the meantime, we would advocate holding on for something north of 400p at least.

Up nearly 6% on reasonable volume in 30 mins of trading.
Hopefully the w/e will see a firm offer on the table.

with sp now hovering just below 400, risk/reward does not favour a new investment ...... 10% is a typical time/risk discount once a bid is tabled, so simple arithmetic

Update on potential offer and recent press speculation
Further to the announcement of 26 April 2011 and recent press speculation, the Board of Micro Focus International plc confirms that it has received a number of preliminary, non-binding approaches which it has chosen to explore (including approaches from Bain Capital and Advent International). At this stage there can be no certainty that any offer for the Company will be forthcoming nor as to the price at which any offer might be made.

This announcement has been made without the consent of Bain Capital and Advent International.

A further announcement will be made as appropriate.

Heres the note from Matrix:
We stick with the view that 450-455p is a realistic bid level. This would represent 13.4x CY11E earnings, 12.5x CY12E, ie. in line with Micro Focuss trading multiple aside from its particular periods of weakness around trading disappointments. Consolidation platform? We believe Micro Focus would represent an attractive consolidation platform for a private player looking to consolidate the fragmented legacy modernisation software market. The companys large (52% of rev) and sticky maintenance base at high margin offers a recurring cash flow stream that can be geared up against more aggressively in private hands, and the groups cash generation profile (FCF yield 9%) provides a valuation backstop.

BarCap saying much the same.
Our price target of 418p assumes very low revenue growth this calendar year and mid single digit growth next year. We are forecasting a small earnings decline for calendar 2011 but above mid single digit EPS growth in 2012. We consider our estimates cautious because of the well publicized internal problems that the company has experienced over the past year. However, we like the business model and believe with the right management the companys internal issues can be turned around, which could imply performance above our expectations. Under our current assumptions and the price target of 418p the stock would trade on 11.5x 2012 P/E vs the software group median of 15x. Maintain 1-Overweight, price target 418p.

Milan Radia at Jefferies urges caution:
Micro Focus revealed takeover discussions on 26 April, but is there enough synergy opportunity or hidden value in the company to ultimately make a transaction sensible? The cash flow profile will always create temptation, but sadly this comes accompanied by considerable baggage in the form of management discontinuity, failed acquisitions and declining end-markets. Recent share option-related activity appears ill-timed. We remain wary. Our detailed note is attached and takes a look at the fundamental growth issues that the business faces, together with analysis of the poor acquisition history.

hence what i wrote in 55

The market seemed to take a more optimistic view yesterday.

There is a theory that, even though it might be slightly unethical, the purchase of shares by the directors just before an approach was announced will possibly ensure that a deal goes through. Will the directors want to be left with a load of shares which will fall in value if a deal is not done? Just hope it all gets sorted out before the FSA says 'foul'.

Depends on timing. If the directors bought before the approach then all is fine and dandy.

In the present, we have not one but two named approaches, plus others as yet unspecified. This should concentrate minds, and sooner than later an opening bid will no doubt be made.

with sp now back to a realistic level (+/-375) relative to the potential bid mooted to be +/-450, it is now worth considering

Are you going to indulge?
Am already in and holding as, imo, this should go through, though opinion seems divided at what price.

as with XEL, i am quite tempted, but that will mean breaking discipline by putting more money into the market as i'm disinclined to sell anything

Still no word on a deal here. Sometimes, the longer it goes on, the less likely it seems, but time will tell.

StockMarketWire.com
Micro Focus has posted a pre- tax profit of $114.5m for the year to 30 April 2011 which is in line with previous guidance but below management expectations at the start of the year.

Group revenue was $436.1m, up 0.8%, but like-for-like revenues at constant currency declined by 6.0%.

Net debt at 30 April 2011 was reduced to $14.9m (2010: $68.2m), after a share buyback of $42.0m.

The Group has maintained the final dividend for the year at 16.2 cents per share (2010: 16.2 cents per share) giving an increase in total dividend per share for the year of 7.3% to 23.4 cents (2010: 21.8 cents).

Going forward the Group says that it intends to concentrate on protecting margins and will avoid taking on loss-making consultancy projects and it is likely therefore that in the near term that overall sales will decline.

Discussions with regard to potential offers for the Group continue but no update has been provided.

RBS note out today:
Todays statement from Micro Focus all feels like hard work; numbers are at the low end of expectations, the outlook points to limited momentum and there is no progress on the bid talks. The shares are likely to drift while the uncertainty continues.
Full-year results today look indifferent with revenues of $436m (vs guidance of $432m-442m) and adjusted EBITDA of $158.7m vs guidance for $159m-167m. Our numbers expense capitalised R&D. On that basis adjusted EBITDA was $149.5m vs our $152mF. These numbers reflect -6% organic growth. Meanwhile, cash numbers look good with strong working capital and accrued income trends and lower-than-expected cash tax. Overall, net debt came in at $14.9m, ahead of $33mF despite $42m of buybacks
The outlook statement points to a challenging near-term outlook, with the company indicating that licences need to return to growth (after -15% growth in FY11) in order to offset an anticipated decline in maintenance revenues. Forecasts already assume little in the way of growth, so there may not be dramatic forecast changes. However, there is clearly limited short-term momentum.
Aside from trading, it is disappointing that there is no update on the bid process, other than to say it is ongoing. The lack of conclusion implies a difficult sale process, which we believe has negative implications for pricing. Furthermore, management appears to be softening investors up to an independent future, with references to the "board considering all options to deliver shareholder value".
On unchanged numbers, the shares trade on a Dec 2011 EV/ nopat of just 11.4x, which looks undemanding and supports a medium-term buy stance. However, we acknowledge that given weak trading outlook and lack of bid conclusion, the shares are likely to drift while the uncertainty continues. In terms of downside support, it is worth noting that the company bought shares back before the bid talks at 323p.

Panmure note:
Who is the most materially undervalued of them all?
Results from IBM bode well for Micro Focus IBM reported that System z mainframe revenue was up 61%; MIPS up 86% YOY. This suggests that the Micro Focus user base is continuing to invest in their Cobol assets. This gives some comfort that Micro Focus can tap into growth. Similar to Misys, Micro Focus shares have been caught up in the fear replaces greed effect, due to a lack of news on the takeover. Micro Focus shares are likely to drift even though this is one of the most undervalued shares on an EV/EBITDA basis at 6.4x the sector average is 9.0x, and there is no bid premium in the share price. The P/E is 8.7x, FCF yield 12.3% and the dividend yield 5.3% (cover is 2.1x). Yes, the lack of bid news will leave the share price dangling in our view, but we retain our Buy.

Micro Focus International plc ("Micro Focus" or "the Group", LSE: MCRO.L) provides its Interim Management Statement for the period from 30 April 2011 to the date of this statement. Financial performance as described relates to the three month period ended 31 July 2011.

Trading ahead of Board expectations
Total revenues in the three months to 31 July 2011 were ahead of the budget approved by the Board on 14 April 2011 and similar to the prior year comparative period on a constant currency basis. The restructuring activity undertaken in the final quarter of last financial year resulted in costs being lower than the comparable period. As a result of these factors, Adjusted EBITDA was also better than the Board's expectations.

Financial position
After taking account of the $15m cash paid in acquiring the Group's headquarters building in Newbury and the cash outflow of $6.4m relating to the restructuring charges of $19m that were unpaid at 30 April 2011 the Group had a net cash position at 31 July 2011 of $0.8m. This compares to a net debt position of $14.9m at 30 April 2011 demonstrating further strong cash generation during the period.

If approved by shareholders at the AGM in September, the final dividend of 16.2 cents per share will be paid out at the end of September at a cost of approximately $32m. The full year dividend for the year ending 30 April 2011 would then be a total of 23.4 cents per share.

Offer Period update
The Group remains in an offer period and the Board continues to explore the potential to deliver value to shareholders through a transaction more quickly than is likely through the continued operational turnaround of the business. The Board believes that there is merit in continuing the current discussions, although there can be no certainty that an acceptable offer will be forthcoming, nor as to the timing of any such offer.

StockMarketWire.com
On 26 April 2011, Micro Focus International plc announced that it had received a very preliminary approach to acquire the Group.

Since then, the Board has held a number of discussions with third parties in relation to various potential transaction structures in order to establish whether a suitable offer for the Group would be forthcoming.

After engaging in discussions for a suitable period, the Board set a deadline for final offers of 19 August 2011. Based on feedback now received from these parties, the Board has terminated discussions and, as a result, Micro Focus is no longer in an offer period.

The Group also announces that, with immediate effect and at its sole discretion, it intends to resume on-market purchases of the Group's ordinary shares under its existing shareholder authority.

The Group currently has 197,816,844 ordinary shares in issue (excluding 8,206,992 held in Treasury) and having already bought back 8,223,092 shares since the last AGM, has remaining authority from shareholders to buy back up to 12,298,791 ordinary shares.

Micro Focus offer talks terminated


On 26 April 2011, Micro Focus International plc announced that it had received a very preliminary approach to acquire the Group.

Since then, the Board has held a number of discussions with third parties in relation to various potential transaction structures in order to establish whether a suitable offer for the Group would be forthcoming.

After engaging in discussions for a suitable period, the Board set a deadline for final offers of 19 August 2011. Based on feedback now received from these parties, the Board has terminated discussions and, as a result, Micro Focus is no longer in an offer period.

was nearly tempted in; so glad i wasn't