Baltimore Technologies has moved to quell industry speculation that it has already been selected for a multimillion pound contract to supply security software for Internet transactions to a new international Internet banking consortium. On the basis of industry rumour, the share price rose 37.5p on Wednesday to 905p sterling (€13.84). However, yesterday's precautionary measures spurred a retreat and the price came back 30p to close at 875p.
In a statement, Mr Fran Rooney, Baltimore chief executive, said the company would inform the market and its investors of any material development, "as and when appropriate".
He told The Irish Times that Baltimore was still awaiting a decision from the new consortium, Identrus, which currently comprises eight leading international banks. Market sources believe Baltimore is the most likely of the bidders to win the contract.
"We do not want to create an uneven playing field based on speculation, and we certainly don't encourage momentum trading based purely on guesswork," Mr Rooney said.
Identrus has not commented on the likely winner of the bid. An announcement on the successful bidder is expected within the next month.
Baltimore's progress since it merged with Zergo, the online security services and consultancy company last December, has been very rapid. According to Mr Rooney, the company is running ahead of expectations despite projected losses this year. It is aggressively expanding its global sales and marketing force by seeking out new revenue streams. The Identrus consortium represents an ideal channel for Baltimore products and, if the bid is successful, would heighten industry expectation that Baltimore will seek a listing on the US Nasdaq stock exchange early next year.
In a statement, Mr Rooney said: "The company is pleased to announce that it is moving faster than anticipated to a new business model, based primarily around sales of software products. This is resulting in a change in business mix, with increasing sales of our strategically important software products."
Baltimore's increasing product focus, away from costly services activity, is likely to appeal to the Identrus consortium, which includes major banking players ABN Amro, Deutsche Bank, Chase Manhattan, Citigroup, Barclays Bank, Bank of America, Bankers Trust and HypoVereins bank. Identrus will be keen to secure a product licence agreement with a provider of transaction security products, while retaining the service element of the arrangement for itself. Baltimore's product-oriented strategy would facilitate a long-term relationship as a supplier of encryption and security products to Identrus, which would provide the service to affiliated banks.
Up to 300 banks may join the Identrus consortium as they follow the example of the bigger players in establishing a global trust organisation. If this is the case, the total revenue potential for Baltimore of licensing its technology to each of these banks could conservatively be valued at around $30 million (€28.7 million).
