Autonomy: We've turned the corner

SOFTWARE group Autonomy put fire back into the technology sector as founder and chief executive Mike Lynch called the bottom of the market.

Unveiling a 31% quarter-on-quarter rise in sales for the three months to 31 December to $13.5m (£9.44m), Lynch said the group had turned the corner and expected to continue growing for the foreseeable future. Pre-tax profits hit $2.7m for the quarter, 55% down on the year earlier period but a sharp turnaround from the $438,000 loss of the preceding three months.

The former FTSE 100 group has had a torrid time after its growth halted last year, sending the shares down from 2500p to below 200p. The stock climbed 52 1/4p to 360p with the latest update.

Lynch said the three months to 30 September, when Autonomy achieved only $10m in sales, represented the nadir for the company, and probably the wider software industry.

'We are fairly happy this is the bottom for Autonomy. Because we don't have a services arm, this reflects very quickly in our numbers, which has been a curse on the way down but should be a blessing on the way up,' he added. 'Basically this is blue-chips getting on with life. Investment banking is back doing some spending in technology to help deal with staff cuts, and even telcos are starting to invest again.'

Lynch said Autonomy's repeat business for its information processing software had risen to about 35% of quarterly sales. The group won between 20 and 25 orders at an average value of $385,000, an increase of 7% over the previous quarter. Earnings were two cents per share. Net profit for the year to 31 December fell 36% to $9.4m on sales down 19% at $52.5m.

A return to the heady growth rates of the technology boom remained unlikely, Lynch added. But the group's business model and limited cost base would result in any further rise in revenues feeding almost directly through to the bottom line.