Autodesk shift to cloud could boost stock 50 per cent

Autodesk looking to provide cloud users with 'a supercomputer behind every tablet'

Autodesk Inc, the computer-aided design software company, could see its shares rise by 50 per cent following the firm's move towards a cloud-based business model.

That forecast boost comes despite figures suggesting CIOs are worried cloud computing is reducing their organisation's control over IT and creating long-term security risk.

Autodesk computer-aided-design (CAD) software is used to design and build physical objects, but according to the financial paper Barron's, Autodesk will sell its final "perpetual licence" for boxed software by the middle of next year.

Autodesk will then move to provide organisations and manufacturers that rely on its software - such as designers, engineers, and filmmakers - to buy an online subscription to it, with future instalments of CAD tools being accessed via the cloud. Autodesk's flagship program, AutoCAD, holds the biggest share in the market for CAD software.

"Imagine that a supercomputer sat behind every tablet," said Andrew Anagnost, Autodesk's head of strategy. "It's a different ballgame, and we've only just begun to scratch the surface on it."

The multi-year deal means businesses won't be paying upfront costs for Autodesk software, which could impact the firm's financial earnings for 2016.

However, while it's predicted that Autodesk will suffer an initial earnings bump, experts predict that a move to providing tools via the cloud could increase the value of shares in Autodesk by almost half by the beginning of 2017.

"We love situations like this," said Rob Nicoski, a portfolio manager at Disciplined Growth Investors. "We think it's fundamentally the right thing to do for the business. And the optics of the revenue makes it look worse than it actually is."

Autodesk hasn't finalised how the new cloud-based model will work, but CEO Carl Bass told Barron's it will enable the firm to "both attract new users and increase the value of those users over time."

"We'll lay out a few things, [including] the specifics about the business-model transformation so that people actually have real numbers, because that helps with some of the ambiguity," he said.

"And then we'll talk a little bit about the competitive dynamics and what it means to be the first engineering cloud software," Bass added.