Autonomy shares rocket but HP's drop on deal news

Shares in Hewlett-Packard tumbled more than 20pc to $23.60 yesterday, as investors reacted to a dramatic about-turn in strategy and its £7bn bid for Autonomy. 

 Investors baulked at Hewlett-Packard’s decision to exit the PC market in which it has its roots, and were “gobsmacked” at the 78pc premium it has agreed to pay for the British software company. Tim Steer, a fund manager at Artemis, whose fund had a significant short position on Autonomy and got badly burned by the deal, labelled Hewlett-Packard a “ship without a rudder in a storm”. 

“I hope for Hewlett-Packard’s shareholders’ sake that it has done the required homework and has a clear vision as to how Autonomy fits in with its existing activities. It is very curious that the shares fell eight per cent [on Thursday]. Stocks usually move up ahead of a bid.” 

He added that Autonomy had “banked a great deal” and that its chief executive, Mike Lynch, should perhaps be running Hewlett-Packard instead. Mr Lynch will continue to head Autonomy after the deal is complete, reporting directly to Hewlett-Packard’s chief executive Leo Apotheker. He will use Hewlett-Packard’s 25,000-strong sales force in order to help grow Autonomy.