Wednesday, 9 September 2009

Kelly resigns from Micro Focus

(By Philip Carnelley, 9 Sep 09, 08:30) Micro Focus surprised us all this morning by announcing that CEO Stephen Kelly had resigned “for personal reasons.” The search for a successor starts now. The company says that Kelly will work with the Board and management to ensure a ‘smooth and well-managed transition'. He's not disappearing overnight, then, but this remains a blow to the company and clearly not one of its own choosing. The shares fell 11% this morning on the news. Micro Focus now particularly needs someone who can make an operational and strategic success of its enlargement into testing through the Borland/Compuware acquisitions (see Micro Focus ambitions).

When Kelly took over in May 2006 the company had £80m in revenues; it should reach or exceed £250m this year (including acquisitions), and operating margin has more than doubled from 16% to 33%. Kelly is a key reason for that performance, and is closely identified with the expansion into the software testing tools arena. That said, the whole management team now has considerable experience of integration and sales execution: corporate knowledge doesn't all leave with Kelly. We'll be able to get a better sense of 'what next' at Micro Focus's forthcoming analyst day later this month. Meanwhile, Chairman Kevin Loosemore - who brought in Kelly originally - will of course be instrumental in finding and appointing his successor. Let's hope he can do as well, again. The wrong choice could undo a lot of good work.

Kelly has also been the driver behind the industry’s Making BrITain Great Again campaign which we have strongly supported.Speaking to Micro Focus this morning they affirmed that the campaign would continue to have their backing. That's important not just for Micro Focus but for the entire UK IT industry.

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