HP to Buy Autonomy; Spin Off PC Unit, Stock Dropping

Computer-maker Hewlett-Packard Co. (NYSE: HPQ) has confirmed it is negotiations to purchase Autonomy Corp. for about $10 billion and concurrently plans to spin off its personal-computer business.

According to the Wall Street Journal HPQ has concurrently released its quarterly earnings – profits of $1.10 per share slightly beat estimated by penny per share, while revenue of $31.2-billion basically matched expectations.

However, WSJ said that company issued a poor outlook for the full year, with revenues far below prior estimates of $129.1-billion.

HPQ shares are down about 6.1 percent as of 3:15 p.m. (New York time).

Separately, HPQ’s chief executive Leo Apotheker has already said he wants to grow the company’s presence in so-called “cloud computing” while shedding lower-margin businesses like PCs.

And this where Autonomy comes in -- but what exactly is Autonomy?

Based in the Cambridge, England, Autonomy is Britain’s second biggest software maker and provides programs that are used in database search – the company is a leading innovator in ‘cloud computing.”

It boasts a sparkling array of customers, including Coca-Cola Co. (NYSE: KO), Nestle SA and the U.S. Securities and Exchange Commission.

The company’s principal technology, Intelligent Data Operating Layer' (IDOL), permits search and processing of text retrieved from database, audio, video or text files or streams.

The founder and chief executive of Autonomy, Dr Michael Richard Lynch, is regarded as the “doyen of European software” and has been favorably compared to Bill Gates.

Last month the company upgraded its outlook for both this year and next due to robust consumer demand. Its second quarter revenues surged by 16 percent from the year-ago period, while earnings per share before exceptional items rose 9 percent.

Autonomy presents trades on the London Stock Exchange and is a member of the FTSE-100 Index.