Shares in Autonomy and Misys up as software sales turn the corner

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Hopes of a recovery in the software sector strengthened yesterday after two British software firms, Autonomy and Misys, predicted 2002 would turn out to be better than 2001.

Autonomy, the Cambridge-based supplier of sophisticated search software, believed it had come through the worst, calling the third quarter of last year "the bottom" of the market as far as it was concerned.

Misys, which sells software mainly to the banking and healthcare markets, said a good performance in both those divisions was set to continue in the second half of its year to the end of May.

The move came just days after the German software firm SAP predicted its sales in 2002 would rise by about 15 per cent as it expected demand for its products to pick up in the second half of this year.

Shares in Autonomy closed up 17 per cent at 360p while Misys rose 4 per cent to 343p on what was a good day for technology stocks across the board.

Mike Lynch, Autonomy's chief executive, said: "Throughout the fourth quarter we saw a slow yet consistent increase in visibility, as we had in the third quarter, which continues to provide us with significant encouragement about the future."

In the last three months of 2001, Autonomy recorded a pre-tax profit of $2.7m (£1.8m), up from a loss of $438,000 in the previous three months but less than half the $5.9m profit made in the fourth quarter of 2000.

Sales in the fourth quarter were $13.5m, up from $10.3m in the third quarter but down from the $21.5m achieved a year earlier. Autonomy has $144m of cash in the bank.

The figures beat most analysts' expectations although those forecasts had been significantly downgraded over the course of the past year in the wake of two profit warnings.

Richard Gaunt, Autonomy's chief technology officer, said there had been a "more positive mood" in the market in the fourth quarter, particularly in the US, than had been seen in the previous three quarters.