THE INVESTMENT COLUMN: Tune in to Autonomy's new software for TV

WE ARE getting close to an age in which viewers will be able to create their own TV channel. The advent of broadband means telecoms and cable companies can offer programmes and clips on demand, but much work is still to be done in the behind-the-scenes technology. How will the viewers' request for, say, all the latest Michael Jackson news clips, be sorted? Autonomy, the software company, has one answer, unveiling a new version of its complex search engine software yesterday which, thanks to speech recognition and other skills, can recognise and categorise programmes and clips. It is already working with some cable firms and third generation mobile operators, and sales could start to come through from next year.

The company's search software is used across government agencies and multi- national companies to access information across e-mails, computer desktops and documents. Last year, sales were $64.8m, up from $54.9m in 2003. Software spending has snapped back after the post-Millennium downturn. Autonomy was first in and first out of that downturn, since it simply sells licences to its customers - there are no ongoing service revenues to cushion the blow when times are hard. Now, though, those additional sales are feeding through immediately into profits, and pre-tax profit was up 12 per cent to $8.6m.

Even before the TV software kicks in, prospects for this year are strong. Corporate IT spending continues to grow, existing blue-chip customers are likely to order additional licences as Autonomy software proves its use, and product upgrades are being launched. The shares are worth holding.