Autonomy confident on 2010

LONDON (Reuters) - British software company Autonomy

said it was confident about 2010 when posting rises in fourth-quarter earnings and revenue that met forecasts and were driven by regulators demanding companies organise their data.

"We have seen a change in sentiment in Q4 and have started to see people do more discretionary things," chief executive Mike Lynch told Reuters Wednesday, adding he would be happy for analysts to nudge their forecasts higher.

Autonomy shares were up 2.0 percent at 1,600 pence at 10:50 a.m., having earlier set a three-month high.

Demand for Autonomy's IDOL product, which searches text for concepts or meanings rather than keywords, remained strong throughout the downturn -- which Lynch termed the "winter scenario" -- but sales of new marketing and database software were more closely aligned to economic recovery.

"It's winter with snowdrops," he said. "We are very confident in an upturn (the new products) will do very well.

Customers from airlines, like American Airlines, through to supermarkets were interested in the products, he said. "It is basically anyone that touches consumers, like Carphone Warehouse , Ericsson and Kraft."

Autonomy, founded by Cambridge University researchers in 1996, posted a 53 percent rise in October-December revenue to $223 million (140 million pounds) and adjusted earnings per share of $0.33, up 35 percent. The results were broadly in line with forecasts for $225.7 million revenue and EPS of $0.34, according to Thomson Reuters I/B/E/S.

Autonomy shares outperformed a 0.5 percent stronger European technology index as margins recovered from a dip in the third quarter when the company's SPE database product launched.

UBS said it expected Autonomy to guide towards 10-15 percent revenue growth in 2010, against a consensus of 14 percent, but noted the company was "well placed to react quickly and decisively to improving market conditions."

Numis, which rates the stock a 'hold', said it struggled to see where near-term performance might come from. "But, in the face of an improving economic environment, with a number of new product launches to support its activities, we feel it would be dangerous to bet against Autonomy at this point."

When asked about analyst forecasts, Lynch said "We are happy to nudge things up a bit." Analysts currently expects earnings per share to increase 31 percent to $1.27 in 2010, according to Thomson Reuters I/B/E/S.

HUMAN-FRIENDLY

Lynch said sales of its patented search technology to other software manufacturers, such as Adobe, Oracle and Symantec were growing 35 percent year-on-year, and there was opportunity for further growth in 2010.

"Most software doesn't handle human friendly information and all of these companies would like their products to do that," he said. "If there's any kind of recovery, (growth) should accelerate."

(Edited by Victoria Bryan and Dan Lalor)