Shares in Autonomy, the software company, fell sharply after it lowered its forecast for full-year revenue as fears over the pace of economic recovery weigh on customer spending decisions.
Cambridge-based Autonomy, which provides software that allows companies to search and organise unstructured information such as e-mails and phone calls, said it now expected full-year revenue growth of about 17 per cent. Analysts had previously expected full-year revenues to rise by about 21 per cent this year.
Mike Lynch, chief executive, admitted that the company had seen some challenges over the summer months that had carried on into September. He also said that customers were still showing “volatility around their view of the current macroeconomic situation”.
He said some customers were “oscillating” from week to week on their investment decisions, making it difficult to predict accurately which customers would buy Autonomy products. As a result the company said it felt it was “prudent” to reflect that volatility in its full-year forecasts.
Autonomy said it expected organic growth of 12 per cent and pre-tax profit growth of 20 per cent for the full year.
Despite the full-year revenue revision, Mr Lynch said the overall figures over the past three months were good.
For the third quarter, traditionally the weakest for software companies, Autonomy is expecting revenues near the top end of its $206m to $211m guidance. Adjusted earnings per share are expected to come in at 25 to 26 cents.
Analysts said some customers saw software products as discretionary items and were holding off decisions while they waited for markets to settle.
Autonomy’s shares closed down 16 per cent at 1,551p, while other UK technology stocks such as Arm and Sage also fell slightly.
“This is a highly rated stock so it tends to get smacked when there is any negative news,” said George O’Connor, analyst at Panmure Gordon. However, he said that the fourth quarter, traditionally a stronger period for sales, was still some way off and software was often sold at the end of the period.
Autonomy raised £500m in a convertible bond issue in February ahead of an expected acquisition this autumn. Mr Lynch said on Wednesday that the acquisition was still on track, though he would not be drawn on the target or the exact timing of any deal.
James Crawshaw, analyst at Standard & Poor’s, said an acquisition would help Autonomy boost revenues. However, he said investors remained focused on organic growth over the longer term.
2010-10-10
FT.com / Technology - Autonomy slides on reduced revenue forecast
via ft.com
