Baltimore share price recovers after plan outlined for radical restructure

Shares in Baltimore Technologies closed last night at 23.75p sterling, up 4.5 per cent, as the markets took a positive view on the company's radical restructuring programme.

Under the two-pronged salvage plan, the internet security company will impose redundancy on 220 of its 1,050 staff and achieve approximately 460 further job cuts through "natural attrition" and the divestment of what it calls "non-core" parts of the business. Fewer than 30 of the job cuts will affect the company's headquarters in Dublin.

Baltimore executives were yesterday talking up the radical strategy, saying that the company could now embark on "a clear path to profitability".

Acting chief executive, Mr Paul Sanders, said that from now on Baltimore would concentrate solely on the security and trust sides of its business and would immediately sell its content management arm as a separate company.

Baltimore paid approximately £700 million sterling (€1,109 million) in shares for Content Technologies just ten months ago but was estimating yesterday that the sale, when combined with staff reductions, would only bring in revenues of £72 million sterling.

It is this cash that Baltimore hopes will keep it afloat and help it ride out the current problems. The company expects a recovery to begin in the second quarter of next year and hopes to remain independent in the long-term, according to Mr Sanders.

Observers see strong potential for an acquisition, however. "There's always the possibility that they'll get acquired," said Mr Daud Khan of Merrill Lynch in London. "It just depends on how the market turns. They're going to be a small player with a lot of value and at their price at the moment, that makes them an acquisition target."

While few deny that Baltimore's core products remain fundamentally strong and attractive, they have in the past been criticised for being overly complicated.

The overall tone of yesterday's announcements was one of clarity and openness however, and this sentiment is expected to filter through to Baltimore's offerings in coming months. Mr Sanders himself admitted that "total clarity is needed".

"There was a frankness and openness in the comments that has been starkly lacking in the way Baltimore has communicated with the investment community until now," said Mr John Coolican of Merrion Capital.

As Baltimore battens down the hatches for a long winter of building customer and investment confidence, it also runs the risk of being overtaken by more secure rival companies if and when the internet security model picks up, according to Mr Khan. "I don't think that they'll be a multi-billion dollar company, but there is a market there for them," he said.

Baltimore yesterday reported a pre-tax loss of £550.3 million sterling for the first six months of this year, compared to a loss of £25.5 million sterling in the same period of 2000. The company has said that it will voluntarily delist from the NASDAQ exchange in light of its current situation.