Tech players face FTSE relegation

The likes of Baltimore are out, but will all tech players really be out for good?

Baltimore is one of the lucky ones really. The security software company has been spared the bated breath and crossed fingers of other FTSE laggards by getting its pink slip last month. It was demoted from the FTSE 250 to the small cap index two weeks ago after its share price fell to 21p, leaving it with a market capitalisation of £105m. In December 1999, when it first made an appearance on the FTSE 250, shares were trading at 4670p and market capitalisation stood at £1.7bn. And this time last year Baltimore was among the successes of the FTSE 100 with a market capitalisation of £2.8bn. How the mighty have fallen. But as the trading bell brings business on the London Stock Exchange to a close tomorrow evening, the company names destined for relegation should read like a list of who's who in IT. Colt, Marconi and Telewest are biding their time in the headline 100 index. Bookham, nCipher, Parthus and Psion are sure-fire goners from the 250 not least of all because they are already hovering around the 400 range. According to FTSE watchers it has been 68 weeks since the dot-com bubble first showed signs of bursting. Sixty-eight long weeks of fluctuating share prices, declining market valuations, ousted bosses and redundant staff. In that 68 weeks technology companies first upped their presence on the FTSE all share index by one third. On the 23 March 2000 60 stocks on the FTSE all share index came from the IT sector. By May 2001 there were 90 IT stocks on the index, with telecom and media shares remaining stable. We know now the increase was a build up to a fall, not an unshakeable vote of confidence in tech shares. The cracks were already beginning to show. While tech shares were doing well in the lower ranges of the FTSE, representation in the top 100 fell from 10 to seven during that time. Tomorrow evening the cracks will be etched out for everyone to see, although any investor worth their portfolio already knows there are no great surprises in store. The new FTSE candidates can expect to be met with a sense of resignation rather than revelation. In certain sectors the sentiment seems to be that at least they cannot do any more harm than those IT pretenders who promised so much and delivered so little. Yet, with the long-term in mind, tech players should be thinking one thing - we'll be back.