Baltimore, currently being transformed from a security project engineering company to a provider of cryptographic security software, saw sales rise an uninspiring 23 per cent to pounds 9.8m. That was overshadowed by a rise in software revenues from just pounds 36,000 to pounds 2.2m. In the second-half Baltimore will continue to expand rapidly with attention focused on raising its US profile.
This is to culminate with an expected cash call to raise pounds 65m to fund the expansion, and will coincide with a listing soon on the Nasdaq index. The bull case for Baltimore is that Verisign, its main competitor, is trading at more than 40-times forecast sales in 2000, compared with a mere nine-times for Baltimore.
Moreover, Baltimore is set to capitalise on the explosive growth in demand for secure e-commerce. Sales of pounds 22m are expected this year, rising to pounds 42m in 2000 and pounds 81m in 2001. Baltimore has signed eight banks to use its Unicert digital identification software, a figure that could rise to more than 70 in the next 18 months. These and other products, such as W/Secure, designed to tap the market for e-commerce over mobile phones, are likely to show 50 per cent year-on-year revenue growth for several years.
Investors should buy on any weakness ahead of the Nasdaq listing and a possible re-rating.