Why ValueAct Capital eliminates position in Micros

ValueAct Capital and Micros

Jeffrey Ubben’s ValueAct Capital added new positions in Armstrong World Industries (or AWI) and 21st Century Fox (FOX). It exited positions in Symantec Corp. (SYMC) and Micros Systems Inc. (MCRS). Top position increases were Microsoft Corp. (MSFT) and CBRE Group (CBG).

ValueAct Capital exited a position in Micros Systems Inc. (MCRS) that accounted for 0.91% of the fund’s first quarter portfolio. The 7.5% stake in Micros Systems was disclosed in March 2013. It was trimmed in 1Q14.

Why ValueAct Capital eliminates position in Micros

Micros Systems Inc. is a leading worldwide designer, manufacturer, marketer, and servicer of enterprise applications solutions. It serves the global food and beverage, hotel, and retail industries. Its food and beverage information systems include enterprise applications, kitchen product applications, mobile applications, marketing applications, and hardware. Most of the software products are designed to operate on industry-standard computers, point-of-sale terminals and workstations, and mobile devices.

The company’s OPERA software suite for the hotel industry includes room reservations, sales and catering, central room reservations, customer information system, revenue management, sales support, data mining, financial statements, and condominium reservations. It also includes accounting, golf reservations, spa management, and quality management.

Through its subsidiary, Fidelio Cruise, Micros markets the Ships Property Management System (or SPMS) suite of applications. This includes a software product. The product is used by the cruise industry.

The company’s retail enterprise software applications include store-based systems, cloud-based applications for business intelligence, and e-commerce solutions.

Micros acquired by Oracle 

In June, Oracle announced that it entered into an agreement to acquire Micros for ~$5.3 billion. Oracle noted in its statement that adding Micros extends Oracle’s offerings in industries. It combines Micros’ industry-specific applications with Oracle’s business applications, technologies, and cloud portfolio. The transaction was completed this month. A presentation disclosed that Micros’ and Oracle’s joint customers include hotel chains Hyatt and Accor.

Micros fiscal 4Q14 revenue up 20%

Micros’ revenue for fiscal 4Q14 was $396.1 million—an increase of 20.6%—compared to the same period last year. Revenue for the fiscal 2014 was $1.405 billion—an increase 10.8% year-over-year (or YoY). Generally accepted accounting principles (or GAAP) diluted earnings per share (or EPS) increased 39.6% for the quarter to $0.74 per share.

For fiscal 2014, Micros said its hardware, software, and service revenue increased by 18.5%, 16.4%, and 7.5%, respectively—compared to fiscal 2013.

  • Hardware sales grew to $319 million. They were driven by proprietary hardware products. The products included Micros’ traditional Workstation products and new products—the mTablet and the mStation. There was also an increase in third party computer equipment sales.
  • Software revenue grew to $166 million. There was an increase in Micros’ proprietary OPERA, Simphony, and retail software products sales. There were also two large sales of its payment gateway software to international customers.
  • Service revenue accounts for the majority of Micros’ total revenue. It grew to $919 million due to increases in recurring maintenance services and Software as a Service (or SaaS) or hosting services. It also grew because of professional and implementation services.