Baltimore relegated from FTSE 250

Old Economy steps into the gap left by tech upstarts as former high-flying security stock is replaced by high street stalwart Woolies

Ailing Irish security firm Baltimore was hit by more bad news on Friday as it was forced out of the FTSE 250.

The company will be replaced by retailer Woolworths, which is being demerged from parent company Kingfisher, on 28 August. Baltimore, previously one of UK's high-flying tech stocks, will instead enter the lowly FTSE small cap index. Its share price is currently hovering around 20 pence, compared to its peak last year of £13.75.

The FTSE 250 is an index of the 250 companies listed on the London Stock Exchange, ranked by market capitalisation, which follow the FTSE 100, the index of the 100 largest companies.

The fall of Baltimore, whose previously high-flying share price once earned it a place in the prestigious FTSE 100, illustrates how far Internet stocks have fallen in the last year. On Wednesday the company announced a second-quarter loss of £23.7m, and plans to sell off its non-core operations. Baltimore claimed that these changes would help it to achieve a positive cashflow by the middle of next year.

This restructuring will include the sale of Content Technologies, which makes the MIMEsweeper email security system. Baltimore bought Content Technologies for almost £700m last October, but it is not expected to raise more than £70m by selling it, under current market conditions.

Analysts are divided over their evaluation of Baltimore's plans.

Prudential-Bache analyst Martin Lister downgraded the company to "sell", from "hold", after admitting that he didn't think Baltimore would manage to become cashflow positive by 2002. Lister thinks that Baltimore is likely to record a pre-tax loss of £76m for the whole of 20001.

However, other experts are more positive. NCB Stockbrokers, which have a "hold" recommendation on Baltimore's shares, said on Thursday that they thought the restructuring plans were credible.

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