Baltimore cuts losses to £9m from £41.8m
The former darling of tech investors, which came crashing down to earth at the end of the tech stocks boom, yesterday reported better than expected results for the first six months of the year with total revenues falling to £22.2m, down 43% over the first six months of 2001.
Cash burn has fallen to £9.4 million in the first six months of this year from £43.1 million in the first half of 2001 in a year which has seen a massive transformation of the company, which employed 1,177 last year and now has fallen to just 382 at the end of
August. Davy Stockbrokers Barry Dixon identifies operating cost reduction as the main highlight of the figures unveiled yesterday. "Total operating expenses (excluding depreciation, amortisation and exceptional items) were £25.4m compared with our forecast of £33.5m.
"Reductions were achieved in all areas with total headcount falling from 562 at the end of December 2001 to 422 at the end of June. Staff numbers have since fallen to 382 at the end of August. The better cost performance resulted in an EBITDA loss of £9.8m, significantly better than our forecast loss of £19.9m and down from the loss of £41.8m in the same period last year. Cash balances were in line with the pre-announcement at £23.1m," he said.
The esecurity company's management also reiterated its guidance of reaching cash break-even in the first half of next year. Merrion Capital's John Coolican says that with cash balances of £23m, the company has sufficient reserves to last more than 12 months.
"This should give management enough time to show it can move beyond the pain of restructuring and prove that it is capable of delivering security software and services that its customers will continue to pay for. Encouragingly, the declining DSO (daily sales outstanding) figure, down to 71 days from 83 in H2 2001, suggests that the company is not offering extended credit terms to close deals," he added.
Mr Coolican says the issue of customer confidence in the company remains the largest challenge confronting Baltimore.
"As a security infrastructure provider, the quality of the software it produces has to date been completely overshadowed by the doubts that the company can survive as an independent entity. As this concern diminishes management can switch its attention to the challenge of attracting new customers to its core product suite. With no sign of any improvement in IT spending in the near future, this is likely to prove very difficult. Despite the progress made by the new management team there is still no reason to be attracted to the shares," he concluded.
