British software maker Autonomy (AUTN) dropped 39.6% by midafternoon after the company said Thursday it expects first-quarter earnings of 4 cents per share, 1 cent below Thomson Financial/First Call estimate, but above 1 cent in the same period last year.

The company expects revenue of $14 million to $15 million, compared to $11.7 million in the year-ago period. Autonomy said it was a victim of a slowdown in IT spending that is beginning to spread from the U.S. to European markets.

UBS Warburg

Thursday downgraded Autonomy to buy from strong buy.

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