The extraordinary sell-off of Baltimore Technologies shares continued in full spate on the London and Nasdaq markets yesterday even though the broad sell-off of technology stocks and the movement back into so-called "value" financial and industrial stocks slackened.
On the London market, where the bulk of Baltimore shares continue to trade, the shares fell £13.01 sterling (€21.06) to £90.50 sterling (€146.51) - a sharp fall from the £150 sterling of three weeks ago. The extraordinary rise of Baltimore from £4 15 months ago to its £150 high, and the heavy losses of the past two weeks, show just how volatile e-commerce and Internet stocks can be and why investors should be careful about investing heavily in them.
Baltimore's losses in London were followed by more heavy selling in New York, where the shares, which peaked at $219 two weeks ago, fell as low as $126 in early trading before regaining ground to trade around $144 by midday. This is still down $10 on the overnight level, but may represent a floor for the shares, with indications that the sell-off of technology shares on Nasdaq was running out of steam.
Baltimore, which joined the FTSE-100 on Monday, would now barely qualify for FTSE membership if the index was being compiled on current share prices rather than the prices on March 8th when the revisions were being made by FTSE International.
The trigger for the renewed selling of technology shares was the overnight near 4 per cent fall in the Nasdaq market. This led to heavy selling on the European market, with Internet providers like Freeserve in Britain and Terra in Spain falling heavily, while lastminute.com, the online seller of airline tickets, slumped 62p to 320p sterling, 70p below last week's much-hyped flotation price on the London market.
With investors looking again towards the `old' economy financial and industrial shares, there is a growing view that Internet and computer-related shares have risen too quickly and that valuations have gone far beyond reasonable expectations. One fund manager said that companies dependent on expected earnings far in the future are most vulnerable to rises in interest rates.
But the technology losses were not replicated at Trintech, another Irish company which is involved in the broad Internet security software area. Even though it is planning to raise $250 million in a share issue, Trintech shares fell only marginally on the Neuer Market.
