Why New CEO Will Keep COBOL A Key Focus of Micro Focus

Hewlett-Packard Enterprise and Micro Focus are the sums of many things.

They are both veteran IT providers (HPE was founded in 1939, Micro Focus in 1976) that are amalgamations of a lot of intellectual property gained both from their own research and development and from the acquisition of other, mosty smaller, companies.

They trade in both old- and new-gen IT products and services. At this point, however, it’s largely old-gen, because by and large, most of the world runs on legacy technology. We’ll get to that later in this article.

HPE MicroFocus

Chris Hsu, the new CEO of Micro Focus who started today, Sept. 1, in his new role after prepping for it for the last 12 months, knows this better than anyone.

Before heading to New York City to ring the opening bell at the New York Stock Exchange on Sept. 1, he spent some time with eWEEK, talking about the genesis of the yearlong HPE-Micro Focus spin-merger, how his tech and private-equity finance backgrounds fit into the company’s leadership picture, and what the road ahead looks like for MF.

“We announced the potential transaction last September, and we’ve spent the last year working tirelessly to make it happen,” Hsu, who served as HPE’s Chief Operating Officer and General Manager of Software for the last year, told eWEEK. “Sept. 1 is our launch of Micro Focus, which will become the seventh-largest pure-play software company in the world.”

You’re wondering now about that list. Well, here it is, according to the companies’ latest market cap records:
1. Microsoft; 2. Oracle; 3. IBM; 4. SAP; 5. Symantec; 6. Dell EMC; 7. Micro Focus  (as of Sept. 1,2017); 8. VMware; 9. CA ; 10. Salesforce.

The details of the HPE/Micro Focus corporate separation are a little tricky to explain, but we’ll give it a go.

“HPE (as a corporation) will have no ownership or interest in the new Micro Focus company,” Hsu said. “The shareholders will own the company. Starting Sept. 1, HPE shareholders will own one share of Micro Focus for each share of HPE. Those shareholders (from HPE) that we put into the company will own 50.1 percent (of Micro Focus). The existing Micro Focus shareholders will own 49.9 percent.”

Companies Will Maintain Arm’s Length Relationship

Got that straight? This means that even though HPE and MF are connected through software and numerous common customers, the two companies will have to maintain a new, arm’s length relationship going forward; in fact, they will have to license each other’s products from now on.

“But it’s no different than how we did it with HPI (which split from HPE two years ago), because internally, we shared a lot of product, and after the spin-merger, we then became commercial partners, and we sell to each other,” Hsu said.

What’s the difference between a “spin-merger,” spinoff, or a regular merger?

Originally published on eWeek

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