Send me real-time posts from this site at my email
Motley Fool

Micro Focus International Stock Pops on Amazon Partnership

What happened

Shares of Micro Focus International (NYSE: MFGP) popped on Thursday after Amazon (NASDAQ: AMZN) gave the company its full vote of confidence for helping businesses migrate to the cloud. As of 3 p.m. EST, Micro Focus stock was up 17%, but had traded as much as 25% higher earlier in the session.

So what

In an Amazon Web Services (AWS) blog post, Amazon notes that 70% of Fortune 500 companies still run their businesses on their own mainframes. The problem is it's expensive to maintain and upgrade your own equipment, providing incentive to migrate computing power to the cloud. This, of course, sounds easy. But when you're talking about a massive enterprise, cloud migration can be complicated.

Image source: Getty Images.

Therefore, Amazon has handpicked several businesses with the chops to help companies move their operations onto AWS. Micro Focus was listed as one of the four pre-qualified technology partners. Amazon noted how Micro Focus had already helped Kmart Australia get on AWS and believes it's up to the task to help others.

Now what

Micro Focus is a small-cap stock. Therefore, it doesn't take much to get it to pop -- much less when Amazon gives you a shoutout. While there's no indication yet for what this means for Micro Focus' revenue going forward, it surely won't hurt. Considering the company posted a 10% year-over-year decline in revenue for fiscal 2020, this might be a catalyst to help it return to growth.

However, investors should note that Amazon is looking to add more technology partners over time. Therefore, Micro Focus won't enjoy its one-of-four status forever.

10 stocks we like better than Micro Focus International PLC
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Micro Focus International PLC wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 20, 2020

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jon Quast has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue