Internet security firm Baltimore Technologies pushed back its breakeven target date by six to nine months yesterday after reporting losses of £663 million sterling (€1.1 billion) for last year. The Dublin-based company also reported that its cash reserves had fallen to just £21.2 million, prompting analysts to question whether it will be able to survive until it makes a profit.
Baltimore forecasts it will break even by the first quarter of 2003 while analysts believe it can survive on its current cash reserves until the second quarter.
The firm, which is in the midst of a restructuring plan that will reduce staffing levels to about 500 from 1,400, generated revenue of £70.4 million during 2001. The firm said its cash burn had reduced to £11.7 million in the fourth- quarter 2001, compared with £21 million in the third quarter.
The results included an asset write-down of £427 million, about 86 per cent of which was wiped off the value of the Content Technologies business which it agreed to sell this year for up to £21 million. The results also include an unexpected restructuring charge of £9.2 million, which hit the firm's cash reserves.
Baltimore is expected to receive £16.5 million from the sale of Content and a stake in its Japanese subsidiary but its reserves could fall as low as £10 million by March.
Mr Bijan Khezri, Baltimore chief executive, said he accepted the jury was still out on whether the firm would survive and the next three to six months would be critical. But the firm had made good progress in the past five months and he was confident there was demand for Baltimore's technology, he added.
He said Baltimore's settlement with its previous chief executive, Mr Fran Rooney, was £10,000 excluding legal fees. Mr Rooney had initiated legal proceedings against Baltimore after comments made by Mr Khezri in the media.
Mr Barry Dixon, a technology analyst with Davy's Stockbrokers, said yesterday the long-term financial viability of the group remained an issue. "The company is sacrificing profitability for revenue growth, which is a risky strategy given their current cash balance," he added.
But he said Baltimore's decision to keep staffing levels at about 500 rather than go as low as 470, which was previously announced by the group, could save jobs in Dublin. The firm's decision to remain focused on research was also positive news for its Irish R&D facility.
Shares in Baltimore fell 5 per cent in London to 12.5 pence following the results announcement.
