Autonomy to float off consumer division blinkx after record Q1 earnings
Autonomy Corporation plc (AU.L), the infrastructure software specialists, said today that after years of successful research and development it will ‘demerge’ its consumer division and float it on London Stock Exchange's AIM market.
The division will be formed from R&D related to the application of Autonomy's award-winning IDOL technology to the consumer market, and blinkx, video search engine specialists. The division will be renamed and floated as blinkx plc, following exercise of an option over shares in blinkx, Inc., a private company.
Autonomy also announced record earnings for the first quarter ended March 31. Revenues rached $65.5m, up 17% from 1Q2006, driven by strong organic growth. Gross profits were up 19% at $60.0m, while net profit was $13.3m, or $0.07 per diluted share, up from $7.0m, or $0.04 per diluted share.
Group CEO Mike Lynch (pictured) said: “Once again our Q1 2007 results broke all company records for the quarter… The combination of strong organic revenue growth and operational gearing, achieved through our indirect sales model, resulted in continued growth in operating margins and bottom line profitability."
"Our success over the years has allowed us to invest heavily in research and development, and has enabled us to maintain our sector leading position”, and has enabled it to float off the new division.
Shares gain 9%
The Cambridge-headquartered Autonomy’s shares gained almost 9% to 760p on the news. It is now valued at around £1.44 billion
The company said that throughout its 11 year history it has led the industry in R&D investment and innovation. As part of that investment, it has dedicated significant resources to consumer applications of its core technology. That technology underlies blinkx plc, the world's leading video search engine, together with blinkx's investment in adapting this and its own technology for the consumer sector.
The demerger rationale is driven by the fact that blinkx plc will focus on consumer-directed search services whereas Autonomy focusses on enterprise applications, and as a result the companies address different markets and clients.
“As an independent company, Blinkx plc will be better positioned to focus its resources on its own client base. In addition, and in connection with its client enhanced focus, the demerger will aid blinkx in continuing to establish its brand and identity,” the company said in a statement to the London Stock Exchange.
Dr Lynch said: "Autonomy has invested over $150m in its core IDOL technology. Recently we have expended further effort in applying our technology to the challenges of the consumer market. Having taken the consumer applications through the development phase and into commercial roll-out, now is the right time to split these activities from our core enterprise software business.
“They clearly have different market characteristics and funding requirements and we believe that shareholder value can be more quickly advanced as separate entities.”
The Cambridge University educated Lynch will retain a non-executive role in blinkx, which he said showed many of the same characteristics and potential as Autonomy in its early days.
blinkx CEO
Suranga Chandratillake is to be the CEO of blinkx plc. He said he was "excited to have access to such an advanced technology portfolio at a time when the ways people use and consume information of all types is changing both rapidly and radically. The development of television, for example, is at a pivotal moment - technologies such as IPTV, on-demand, non-linear, personalization and implicit query are expected to significantly change how consumers interact with content.
“The first of our many applications of IDOL's unique meaning-based technology addresses this area. Autonomy's technology made it the world leader in the enterprise space, and we believe the same technology arms blinkx for success in this new, complex rich media environment."
The demerger will result in the payment of a dividend in specie of Ordinary Shares in Blinkx plc to the shareholders of Autonomy. Shares in Blinkx plc are expected to start trading as a separate company in May 2007.
After the demerger and any associated offering, Autonomy is expected to hold approximately 10% of Blinkx plc's ordinary shares.
25th April 2007
