FT.com / Companies / UK - Autonomy up on subprime business lift
Autonomy up on subprime business lift
By Maija Palmer in London
Published: January 29 2008 23:55 | Last updated: January 29 2008 23:55
Shares in Autonomy rose 7 per cent after the search software company reported a 62 per cent rise in annual profits and said most of the world’s leading banks were considering using its software to prepare for lawsuits related to the US subprime mortgage crisis.
The Cambridge-based company held firm its forecast for 10-20 per cent growth in 2008 in spite of fears of a global slowdown.
Mike Lynch, chief executive, said: “We have not seen any effects of slowdown yet and even if there is a downturn, we feel comfortable with our estimates.
“We have very little exposure to consumer markets and the financial sector, and 90 per cent of our business is driven by regulatory requirements.”
He said that any slowdownwas likely to be offset by benefits from the subprime crisis, which is creating a new market for Autonomy’s software.
Autonomy’s technology allows companies to sift through unstructuredinformation such as e-mails, Word documents and even telephone call recordings, helping companies prepare for court cases.
Earlier this year, Autonomy signed a $70m (£35m) deal – by far its biggest contract to date – with Citigroup as the bank wrote off more than $18bn in subprime-related losses and braced itself for potential investor lawsuits.
Mr Lynch said: “Every other major bank – barring one or two exceptions – has the same problem and most of the top-name banks are in the process of doing something with us.
“A lot of organisations are having to spend money quickly.”
Revenues for the year to the end of December rose 37 per cent to $343.5m while pre-tax profits rose to $91.4m from $56.3m the previous year, beating analysts’ estimates. Earnings per share rose from 8 cents to 11 cents.
Revenues were boosted by the acquisition of Zantaz, but Autonomy also registered 20 per cent revenue growth for its core IDOL software as it signed deals with companies such as China Mobile, AT&T and Morgan Stanley and organisations such as the US airforce, Nasa and Nato.
Shares in the company, which have gained nearly 57 per cent over the past year, rose 61p to 906p.
FT Comment
● Barbershops and funeral parlours are generally seen as recession-proof businesses, and to this list we could consider adding Autonomy – which is as close to recession-resistant as it gets in the technology sector. Businesses have to be able to find documents amid their ever-increasing mountains of electronic data – this is not discretionary spending – and if they get sued, they have to find them even quicker. Market concerns have taken a little shine off the shares in the past month and left them looking attractive at about 30 times this year’s earnings estimates.
Copyright The Financial Times Limited 2008
Showing posts with label Search software. Show all posts
Showing posts with label Search software. Show all posts
Monday, February 04, 2008
Friday, February 01, 2008
Ready to Rumble: Microsoft-Yahoo! vs. Google | AMR Research
Ready to Rumble: Microsoft-Yahoo! vs. Google | AMR Research
The last minutes of January were barely off the clock when Microsoft made a $44.6B cash-and-stock bid for Yahoo!. Microsoft is offering $31 per share, a 62% premium over Yahoo!’s closing stock price January 31. If I were Yahoo! co-founder and CEO Jerry Yang, having recently stepped back into the lead role only to deal with executive departures, disappointing results, and layoffs, I’d be ecstatic that Steve Ballmer has taken Mick Jagger’s offer and has come to “my emotional rescue.”
When I saw the news flash on a television as I entered the gym, I had three reactions:
First, it’s a lot of money for a company that continues to fall far behind Google in revenue, market share, market valuation, profitability, and mindshare. The offer is nearly seven times last year’s revenue.
Second, can Microsoft recoup its investment? I use My Yahoo! every day … for free. When I talked about this with one of the investment gurus who belongs to my gym he said, “If Yahoo! provided the same services for just a penny per subscriber per year, they would lose 50% of their base immediately.” While I’m not sure that’s true, his point is that we’ve come to expect Yahoo! and Google functionality will be free. The cost is offset by the paid ads that no one admits to clicking on.
Third, can Microsoft retain the key Yahoo! developers and sales stars? There is so much venture money in Silicon Valley chasing proven talent that it may be hard for Yahoo! employees to accept Microsoft’s planned retention packages in lieu of the opportunity to join the next Google. How ironic is that?
On the flip side, if Microsoft really wants to slow or stop Google in its march across the enterprise, did it have any other choice? As I was trying to finish writing, Jonathan Yarmis and Jim Shepherd came to my office arguing passionately that this deal makes sense for Microsoft. To make sure his points were heard, Jonathan teamed with Chris Fletcher and Jim Murphy on a companion piece.
Zimbra as hidden jewel for Microsoft Live?
When I think of Yahoo!, I think of my portal. In considering the Microsoft-Yahoo! combo, I initially overlooked Zimbra. Yahoo! bought the collaboration software vendor last September for $350M. I first wrote about Zimbra, last April, saying:
“When I first saw it, my reaction was that this is what SAP and Microsoft are trying to do with Duet. The Zimbra Collaboration Suite is designed to allow PC users to add or build new capabilities on top of their preferred desktop standard (like Microsoft Outlook or any of its competitors). The company provides a wide range of Zimbra-developed and third-party “zimlets” that allow users to access Google maps, VoIP services, data sources (such as Wikipedia and catalogs), enterprise applications, and third-party services such as travel.”
Zimbra’s software would be ideal for extending—some would argue saving—the Microsoft Live initiative. It certainly sets up an interesting play against Google Apps. Does Microsoft Zimbra escape the scrutiny of the U.S. Department of Justice?
Meanwhile, Google shares get walloped
Ironically, Google employees with options at ridiculously high strike prices may be looking for the next Google, too. Shares of GOOG were getting spanked at opening February 1. By 11:30 a.m., the stock was trading at $513.01, down $51.29 or more than 9%. This is a far cry from the peak of $747.24 reached last November. At the current price, Google still enjoys a market cap that tops $160B. That’s more than $100B higher than SAP ($57.58B) and $56B higher than Oracle.
While some of the sell-off might be because of the threat of Microsoft emerging as a stronger competitor, the market has reacted negatively to Google’s recent earnings report. The company said that 4Q07 profits and paid clicks had grown slower than the previous three quarters. A fierce debate has ensued over whether Google will be helped or hurt by the long-predicted U.S. recession.
What do you think?
Is Steve Ballmer making a smart bet, or could he have waited six months and bought Yahoo! at a fraction of today’s price? If the deal goes through, will Microsoft be able to keep Zimbra or will it be seen as having too much power on the desktop? Is Google’s recent slower growth rate in profits and paid clicks a sign of saturation or just part of the ebb and flow of its dynamic business model? As always, I welcome your feedback and ideas—brichardson@amrresearch.com.
The last minutes of January were barely off the clock when Microsoft made a $44.6B cash-and-stock bid for Yahoo!. Microsoft is offering $31 per share, a 62% premium over Yahoo!’s closing stock price January 31. If I were Yahoo! co-founder and CEO Jerry Yang, having recently stepped back into the lead role only to deal with executive departures, disappointing results, and layoffs, I’d be ecstatic that Steve Ballmer has taken Mick Jagger’s offer and has come to “my emotional rescue.”
When I saw the news flash on a television as I entered the gym, I had three reactions:
First, it’s a lot of money for a company that continues to fall far behind Google in revenue, market share, market valuation, profitability, and mindshare. The offer is nearly seven times last year’s revenue.
Second, can Microsoft recoup its investment? I use My Yahoo! every day … for free. When I talked about this with one of the investment gurus who belongs to my gym he said, “If Yahoo! provided the same services for just a penny per subscriber per year, they would lose 50% of their base immediately.” While I’m not sure that’s true, his point is that we’ve come to expect Yahoo! and Google functionality will be free. The cost is offset by the paid ads that no one admits to clicking on.
Third, can Microsoft retain the key Yahoo! developers and sales stars? There is so much venture money in Silicon Valley chasing proven talent that it may be hard for Yahoo! employees to accept Microsoft’s planned retention packages in lieu of the opportunity to join the next Google. How ironic is that?
On the flip side, if Microsoft really wants to slow or stop Google in its march across the enterprise, did it have any other choice? As I was trying to finish writing, Jonathan Yarmis and Jim Shepherd came to my office arguing passionately that this deal makes sense for Microsoft. To make sure his points were heard, Jonathan teamed with Chris Fletcher and Jim Murphy on a companion piece.
Zimbra as hidden jewel for Microsoft Live?
When I think of Yahoo!, I think of my portal. In considering the Microsoft-Yahoo! combo, I initially overlooked Zimbra. Yahoo! bought the collaboration software vendor last September for $350M. I first wrote about Zimbra, last April, saying:
“When I first saw it, my reaction was that this is what SAP and Microsoft are trying to do with Duet. The Zimbra Collaboration Suite is designed to allow PC users to add or build new capabilities on top of their preferred desktop standard (like Microsoft Outlook or any of its competitors). The company provides a wide range of Zimbra-developed and third-party “zimlets” that allow users to access Google maps, VoIP services, data sources (such as Wikipedia and catalogs), enterprise applications, and third-party services such as travel.”
Zimbra’s software would be ideal for extending—some would argue saving—the Microsoft Live initiative. It certainly sets up an interesting play against Google Apps. Does Microsoft Zimbra escape the scrutiny of the U.S. Department of Justice?
Meanwhile, Google shares get walloped
Ironically, Google employees with options at ridiculously high strike prices may be looking for the next Google, too. Shares of GOOG were getting spanked at opening February 1. By 11:30 a.m., the stock was trading at $513.01, down $51.29 or more than 9%. This is a far cry from the peak of $747.24 reached last November. At the current price, Google still enjoys a market cap that tops $160B. That’s more than $100B higher than SAP ($57.58B) and $56B higher than Oracle.
While some of the sell-off might be because of the threat of Microsoft emerging as a stronger competitor, the market has reacted negatively to Google’s recent earnings report. The company said that 4Q07 profits and paid clicks had grown slower than the previous three quarters. A fierce debate has ensued over whether Google will be helped or hurt by the long-predicted U.S. recession.
What do you think?
Is Steve Ballmer making a smart bet, or could he have waited six months and bought Yahoo! at a fraction of today’s price? If the deal goes through, will Microsoft be able to keep Zimbra or will it be seen as having too much power on the desktop? Is Google’s recent slower growth rate in profits and paid clicks a sign of saturation or just part of the ebb and flow of its dynamic business model? As always, I welcome your feedback and ideas—brichardson@amrresearch.com.
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