Baltimores Survival Plan

New CEO Khezri to put focus on 'fresh perspective on what's core' and 'structured solutions'

Baltimore Technologies PLC.s new CEO is wasting no time in putting his stamp on the struggling security vendor.

Days after taking the job last week, Bijan Khezri said that he is exploring the possibility of selling some of the companys less profitable divisions and that he wouldnt be surprised to receive takeover offers as well.

Baltimore, in Dublin, Ireland, is in the middle of a major restructuring effort, which has already included more than 450 layoffs and the consolidation of some of its business lines. The PKI (public-key infrastructure) vendor has also put its content security business up for sale.

Khezri said the turnaround effort is well under way, and the company has had significant interest from several suitors in its content security unit. He stressed, however, that the reorganization will be a continuing process.

"The layoffs are complete, but we need to have a fresh perspective on whats core," said Khezri, a former Baltimore board member and veteran of two other security companies. "Our hardware business, for one, is not core. Its not huge, and if we can see the right partners, we will consider [divesting it]."

Khezri added that while he isnt actively soliciting takeover proposals, "Im sure a lot of people are considering it. But anyone watching us as a target would want to see us succeed first."

The main focus in the near future for Khezri will be Baltimores nascent managed-services business. One of the main reasons for Baltimores recent problems was the companys decision to sell its PKI tool kit as a product, Khezri said. Going forward, Khezri plans to develop more fully integrated solutions that it can deliver to service providers.

"There have been fundamental flaws in the way weve delivered our technology to our customers," Khezri said. "I believe its critical to our sales for applications to drive the need for PKI. We have to have structured solutions."

Industry observers, however, doubt that the service provider market will be any kinder to Baltimore than the enterprise market was.

"I always get nervous when companies say theyre going after service providers," said Pete Lindstrom, an analyst at Hurwitz Group Inc., in Framingham, Mass. "All youre really doing is transferring the problems that PKI has to the service provider."

Service providers, meanwhile, see the move as a step in the right direction. "Its a strong trend in the industry. They have to avoid commoditization," said the president of one of Baltimores service provider customers who asked to remain anonymous. "I think people would willingly pay a premium for enhanced services solutions. But [Baltimore] may be a little late."

Khezri has a difficult task ahead of him. The company was once the rising star of the security industry, acquiring numerous companies and growing quickly under the aggressive leadership of then-CEO Fran Rooney.

But when the technology sector soured early this year, the company was caught unaware, and Baltimore officials soon realized they were overextended and overstaffed. Rooney tried to right the ship this spring, refocusing the company on managed services and core PKI products while laying off 250 workers. But the changes were not enough, and Rooney resigned in July.