Baltimore Technologies Battered After Warning

by Jason Gorringe, Tax-News.com, London

09 July 2001

Irish technology star Baltimore Technologies' share price in London fell 38% last week to 16.5 pence, with most of the fall coming on Thursday after the group announced it was undertaking a major restructuring programme following a global operational review. Revenues for the quarter to June 30 are expected to be down 35% at UK£15.5m against expectations of £20m.

The Irish internet security specialist said it would cut a "very significant number of jobs"; however, chief executive Fran Rooney refused to be drawn on exact numbers of job cuts within the 1,400-strong company. Baltimore announced 250 redundancies in May, 45 of them in Ireland, and these have been implemented. Mr Rooney said the company had made annualised cost savings of IR£14 million from the job cuts and the benefits of this should be seen from July 1st.

Baltimore blames a weakening economy for the slowdown in software sales but believes that orders now on hold will eventually come through. "We plan to remain independent," said Mr Rooney, "Our objective is to rebuild investor confidence in the company - and we've taken some pretty tough decisions to do that. Our customers are extremely loyal, and I'm sure we will continue to win new business."

Baltimore has UK£54 million in cash and its cash 'burn' is £25m a quarter, but the company doesn't plan on raising more money. "A rights issue is always an option, but we're focused on working within our cash resources," said Paul Sanders, the finance director.

Analysts' reactions to the announcement and conference calls were not favourable. 'They have lost investors' confidence completely. They are down 94 per cent since January,' said Merrion's analyst John Coolican. 'We pressed them for details and they were not forthcoming, and that tells me their management are not in touch with the market.'

Baltimore has dual listings in London and on Nasdaq. The company's share price dropped below $1 in the US 10 days ago and, by Nasdaq rules, if it does not come back up above $1 within 30 days it risks losing its listing. 'The process in Nasdaq is very complex and they will write to us and inform us that our share price has been down for 30 days and then we have 90 days to rectify it,' Mr Rooney said. 'So we have another three months to react to that and there are lots of different things we can do - we can consolidate our stock back up.'

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