Autonomy enjoys rebound in IT spending

Autonomy said it was benefiting from an increase in discretionary spending by some customers as the UK software group unveiled a better-than-expected jump in quarterly sales and profits that helped lift its shares.

Mike Lynch, chief executive, said that Autonomy was seeing a “gentle sustained recovery”, adding that current market estimates for the year could “turn out to be conservative”. He also said that customers were increasingly choosing to access Autonomy’s products via the cloud.

His comments come as technology groups including Intel and IBM said this week that they were benefiting from an unexpected rebound in IT spending as more companies shifted to the cloud and consumers increasingly accessed information over the internet

Autonomy, which makes software that helps companies and governments make sense of unstructured information in emails or on social networking sites, said it had signed a record number of large deals during the first quarter with clients including Hewlett-Packard.

For the three months to the end of March, Autonomy reported adjusted pre-tax profits of $95m on sales up 13 per cent to $220m. Earnings per share on an adjusted basis for the first quarter were up 13 per cent at 29 US cents, slightly ahead of consensus forecasts.

Autonomy raised £500m via a convertible bond early last year with a view to making a purchase in North America that it initially flagged would happen last autumn. However, a deal has yet to materialise.

Mr Lynch indicated that Autonomy was still looking to make an acquisition but reiterated that if the group was unable to “consummate” the deal for any reason it would return cash to shareholders.

Autonomy has never named the bid target. Open Text was seen by some analysts as a possible contender but John Shackleton, the Canadian group’s chief executive, recently dismissed talk that it was a bid target for Autonomy.

Mr Lynch said on Thursday that the company’s new social media product, which helped organisations make sense of information on social networking sites, was seeing good results.

Autonomy has also recently been demonstrating Aurasma, a new technology that layers data over real-life buildings or objects as seen through the camera function on a smartphone and searches for 3D video images or adverts related to them. The company is expected to make the technology available as a free application for smartphones from next month.

Analysts said the product, which is billed as a consumer application, could also be attractive for businesses.

Autonomy’s shares, which have underperformed the FTSE 100 over the last year, were trading up 5 per cent by mid-afternoon on Thursday.

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