Security firm to ax 220, sell key business unit
Plumbing the depths of its downward spiral, Baltimore Technologies plc. is once again in the throes of a reorganization that will have the security vendor banking on wireless PKI and managed services, two areas with long-term promise but few immediate rewards.
The Dublin, Ireland, company last week said it is cutting 220 more jobs and selling at least one key business unit after reporting a loss of more than $58 million in the first half of this year.
Paul Sanders, Baltimores acting CEO, said last week that the company will again be profitable by the second quarter of next year, but users, analysts and other public-key infrastructure vendors say Baltimores bet on wireless and managed services will make that a difficult goal to achieve.
"Managed services is the way things are going, but I dont see how it will make them that much money. Its an expensive business for them," said one Baltimore PKI customer, who requested anonymity.
And while many customers and industry observers say they believe that wireless PKI will be a solid business, they are nearly unanimous in their belief that it is several years away from being a profitable market.
"Wireless is going to be a very big thing. We think it will be a large part of the number of transactions performed online in the future," said Brian OHiggins, chief technology officer of Entrust Inc., a Plano, Texas, PKI vendor. "But its clearly not here yet. It wont be this year. It wont be next year."
Baltimore doesnt have a lot of time to wait, however. The company lost $33.3 million in the second quarter, and with cash reserves of just $75.8 million at the end of the second quarter, it is running short of funds.
The security vendor also said last week that it is looking to slash its number of staff even further, to about 470 employees from the current 1,150.
"This is back to what we do best," Sanders said. "The wireless market is accelerating, and we have a leadership position."
Last weeks announcements are the latest in a litany of disappointing events for Baltimore. The company grew rapidly over the last two years, thanks to a string of acquisitions, which analysts say may have diluted the companys focus on PKI products. One acquisition, Content Technologies Inc., is for sale. Sanders said it will be run as a separate unit until it is sold.
Last month, former CEO Fran Rooney, who had guided the company through its explosive growth, resigned abruptly. Now, Sanders, who is looking for a permanent replacement for Rooney, said he will refocus Baltimore on its authentication and authorization products, most notably its UniCert PKI solution and its SelectAccess authorization software.
"SelectAccess is their strongest business," said analyst Pete Lindstrom, of Hurwitz Group Inc., in Framingham, Mass. "The only people doing things like wireless PKI were the Fortune 500 who thought wireless might be a neat little idea."