Autonomy dives 11%

As I write at midday 24th Apr 08, Autonomy is suffering a pretty massive 11% decline to 881p - writing some £230m off its market value. This on a day when they announced Q1 results showing revenues up 61% to $105.1 Although this included Zantaz (July 07) and Medio (Oct 07) ) organic revenue growth was a pretty impressive. PBT increased 47% to $23.6m. For more information on Autonomy's Q1 results see Thomson Financial or see the pdf of George O'Connor (Panmure Gordon) note .

The reason for the price fall is that Autonomy trades on such a high forward valuation that nothing short of the promise over ever-increasing stellar performance will do. All that CEO Mike Lynch seems to have done today is to retain his conservative view of the future but added "we will review that if, as expected, current strength continues". In other words, he didn't 'warn' about future earnings; just decided not to hype them up anymore - which seems pretty sensible to me!

Ian Spence added in http://www.megabuyte.com/ this morning "Autonomy's one key weakness is its visibility. Whilst trading currently looks to be strong, because of Autonomy's dependence on licence fees, any weakness in revenues would come with little warning and have a significant impact on profits. Furthermore, on 35x 2008 earnings, the shares would clearly be hit very hard by any such weakness. "

Footnote - Autonomy continued to slide during trading on Thursday and ended down 15% at 844p.