Baltimore to cut more jobs

August 22, 2001 Posted: 1209 GMT

LONDON (CNN) -- Baltimore Technologies, a former stock market favourite of the new economy that has fallen on hard times, said it would cut hundreds of jobs.

The Irish Internet security company plans to reduce its workforce to around 470 by the second quarter of 2002 from current levels of 1,100 staff. It aims to £72 million ($104 million) a year to help it return to profitability.

Dublin-based Baltimore unveiled the cuts along with plans to sell a business, and also posted a widened quarterly deficit, reflecting the impact of an economic slowdown that is forcing customers to cut their IT spending.

The second-quarter net loss came in at £475 million, or 96 pence a share, up from 13.2 million, or 3.4p a share, a year ago earlier. Most of the additional loss consisted of a £393 million one-time charge reflecting the drop in value of Content Technologies, which Baltimore bought last year.

Baltimore plans to sell Content Technologies, a maker of software to detect viruses in emails, for which it paid £700 million. Analysts now estimate is worth between £50 and £70 million.

The company now plans to focus its expertise on providing trust and security for e-business.

Baltimore already announced 250 job cuts as recently as May. Its workforce reached 1,400 at its peak in March 2001. The company plans to reach its target of a 470-strong staff by means of the sale of other business unit.

"Stripping out the Content business, we expects revenue of £50 million next year, but costs will be around £40 million ...  we still don't expect them to break even," Barry Dixon, an analyst at Davy Stockbrokers in Dublin, told CNN.

Shares in Baltimore (BLM.L) soared 7.9 percent to 24 pence. At the height of the tech market boom in March 2000 the stock hit a high of 1,375 pence,  valuing the company at £5.5 billion. Its market capitalization is now just over £110 million.

Chief Executive Fran Rooney quit the firm in July, raising the prospect of a takeover. Baltimore turned down an approach from privately-owned British technology licensing company Chantilley.

"Demand has fallen and the markets have turned against Baltimore since they bought Content," Dixon said. "They must now concentrate their efforts on the on their PKI (public key infrastructure) business and become the No. 1 in that sector."

The PKI business provides companies with the technology to provide users with electronic signatures and enable the encryption of documents.

"The results have not been acceptable," said new Chief Executive Paul Sanders. "The important point is the quarter doesn't reflect the true potential of this group. That's why we've entered into the restructuring plan, and the main objective of the plan is to ensure we are fully funded through to profitability (with) no need to go to the capital

markets for further money."

"We are looking at divestment of the Minesweeper (Content Technologies) business unit, but I would stress it's not a fire sale, we can chart a clear path to profitability for that business."

The company also plans to voluntarily delist from the U.S. Nasdaq exchange from September 30 this year, a move that could save it £2 million a year.

There had been speculation that Nasdaq could terminate Baltimore's listing  by the end of the year. The exchange can delist a company if its share price remains below $1 for 30 days. Baltimore stock has been below this level since July 16.

The stock closed at $0.67 on the Nasdaq on Tuesday.

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