Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Will Oracle and Microsoft Bid on Autonomy?

There’s a sketchily sourced report in the U.K.’s Daily Mail this morning saying that the British software concern Autonomy may be the subject of a bidding war between Oracle and Microsoft after the first of the year.

Interest from the two software giants would seem a plausible explanation for the peculiar circumstances around Autonomy’s on-again, off-again talks about making an acquisition.

In April it said it would sell convertible bonds to raise money–nearly $800 million–to fund an acquisition, though it never named a target.

Then suddenly last month the company said the deal it had been working on was being put off because of another unspecified opportunity, which promptly sent its stock reeling. Autonomy shares, which trade on London’s FTSE, are down 27 percent from their 52-week high. It could be that whatever deal the company was working on was put on the back burner following unexpected overtures from Larry Ellison and Steve Ballmer.

Autonomy specializes in what it calls Meaning Based Computing. Its software is designed to recognize the relationships between structured data–what you find in an organized database–and unstructured data–which can be anything from words in a written document, a speech or conversation, or anything else that has information that isn’t organized into rows and columns. Its customers run the gamut from businesses such as FedEx, the NYSE, Louis Vuitton and Goodyear to tech firms like Adobe and Cisco Systems.

On its face this rumor is interesting because now that the battle to roll up the data storage firms is largely resolved following Dell’s acquisition of Compellent, one of the next dealmaking battle fronts for the large IT vendors is going to be software that makes managing data in all its various forms easier, more powerful and less costly.

Autonomy certainly fits that bill, and at market valuation in the $7 billion neighborhood, both Oracle and Microsoft could get it done.

However, the cynic in me wonders if this is just a deliberate rumor intended to goose Autonomy’s flagging stock price. If that’s the case, it appears to have worked.


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