Irish security firm Baltimore is to de-list from the Nasdaq and restructure its business after making larger losses than expected in the second quarter of its 2001 financial year.
Baltimore was one of Ireland's great success stories during the Internet boom, and Intel was among the investors that saw promise in the company's security products. Baltimore has invested heavily in public key infrastructure (PKI) technologies, but its failure to turn a profit is indicative of the slow uptake of PKI by industry. The company's stock reached almost £14 in early 2000 but now trades around the 23p mark.
Announcing its results at a conference call on Wednesday morning, the company said it will concentrate on providing security and trust for e-business and sell off all non-core activities.
The company also announced that its business review would involve splitting its trust and security business from its content mimesweeper operations. "There are limited synergies between the two sides of the business, and we can't do justice to both," said Paul Sanders, acting chief executive of Baltimore.
"We're looking to divest the mimesweeper business unit as soon as possible," explained Sanders, who insisted that the move was not a fire sale. "We can see a clear path to profitability for this business."
The company is to cut 220 jobs from its present workforce of 1,110. Sanders admitted that Baltimore has a final target workforce size of 470 by the second quarter of 2002, but said he hoped this reduction could be achieved by selling off non-core activities.
However, compulsory jobs losses on top of the 220 already announced seem inevitable. "We're also bringing in a limited amount of attrition," Sanders admitted.
Baltimore is hoping to save between £14m and £15m per year through its workforce reduction.
According to Sanders, Baltimore will save around £2m by leaving the Nasdaq share index. "Only around three percent of our shares are traded on the Nasdaq," said Sanders. The company will also declare its financial results every six months in future, rather than every quarter.
Baltimore's performance in the second quarter of the year was worse than the market had predicted. Analysts were expecting a loss of around £18m, but the company actually lost £23.7m. As expected Baltimore had second quarter revenues of £16.5m, compared to £22.9m in Q1 and £16.3m in Q2 last year. "These results are not acceptable, and do not reflect the potential of this company," insisted Sanders.
Baltimore is still hopeful for the future. "Internet security is an absolute must, especially for financial companies," explained Aiden Gallagher, senior Baltimore executive. "We're planning to concentrate on showing companies how they can implement security more quickly and cheaper than before," Gallagher added.
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