We were too cautious, Autonomy tells City

Autonomy today told analysts they might have been too cautious about the outlook for 2011, two weeks after a profits warning which knocked more than a quarter off its share price.

Mike Lynch, chief executive of the internet software giant, said: "We are confident of the outlook for demand and expect to continue to deliver good earnings growth in 2011, with upside to current market consensus."

He also admitted that the firm might have been over-cautious in its earlier trading update when it warned revenues could be 3% lower than market forecasts for the year largely because of the timing of some big contracts.

Today he said: "Given this update it may seem very conservative to have previously changed our outlook for the fourth quarter, but we felt it was safer."

Third-quarter profits rose 34% to $86.3 million (£54.6 million) on revenues 10% higher at $211 million.

But some analysts were far from convinced by Lynch's words. David Toms at Numis Securities said: "Autonomy's claim that there is upside to consensus carries little credibility given the abrupt change in guidance from July's upgrades to October's downgrades."

Roger Phillips at Evolution said: "The company's explanation makes little sense to us."