The founder and chief executive of Baltimore Technologies, Fran Rooney, has resigned. Mr Rooney's resignation comes after months of poor performance from the company which has resulted in its share price nosediving.
John Coolican, analyst at Merrion Capital, says the company is now likely to be taken over, with IBM and Microsoft the most likely candidates.
'The question is whether this happens before or after Baltimore goes into liquidation,' he said.
But Barry Dixon, technology analyst at Davy Stockbrokers says the departure of Rooney is a prelude to the company launching a rights issue to existing shareholders.
'It looks like the board felt that existing shareholders wouldn't fund a rights issue with Fran still on board,' said Dixon.
Baltimore's share price closed 31.5% higher at 25 pence sterling in London this evening after the news of Fran Rooney's resignation.
Paul Sanders, the company's finance director, is to act as the company's interim CEO until the firm finds a permanent successor to Mr Rooney.
'After five years with Baltimore, I have decided to pursue other interests, including a role as chairman of an e-learning company,' Fran Rooney said this morning in a statement.
Mr Rooney acquired Baltimore Technologies in 1996 for just £300,000. Originally backed by Dermot Desmond, he built up the company to become one of the most successful of the Internet era, specialising in e-commerce security.
Recently, however, a series of poor communications with the stock market has hit the company's share price. Davy's Barry Dixon says the company has enough cash to fund itself until Q3 2002 if it cuts a further 250 jobs, following the laying off of 250 staff in May.
But he says the company will not be profitable until 2003, so there is clearly a funding problem. Dixon says Baltimore must either complete a rights issue, or sell part or all of the business, otherwise it will go bust.
In 1999 Baltimore listed on London's FTSE and the New York Nasdaq. Droves of investors pledged their money to the company and within months it was a member of the elite FTSE 100 share index.
But the company did not survive the sharp downturn in the tech sector and its share price has plunged by 98% from a boom-time high of £15 early last year. It recently announced a major round of job cuts from its 1,200 workforce. Things are no better in New York and it now looks certain that the company will be delisted from the Nasdaq over the coming weeks.
The company says it has cash reserves of around £54m sterling and says it does not need to seek funds from the equity or debt markets. Instead it is looking to make deep cost cuts and has not ruled out asset sales or plant closures.
Fran Rooney's resignation is seen as a last ditch effort to secure its future, but analysts say his loss will be profound.
Peter Morgan, Chairman of Baltimore thanked Mr Rooney for his contribution to the company saying he had built Baltimore Technologies into a global leader in e-security.
Paul Sanders, Acting CEO, said the company is going 'to work on the fundamental changes needed to restructure the business and we will update the market with details when we announce our second quarter results in August.'
Baltimore also announced today the appointment of two new non-executive directors to help build a 'sustainable business model. The new directors are David Guyatt, founder and former CEO of Content Technologies and Bijan Khezri, a director at Baltimore from 1998 to 2000 and a corporate financier.
Baltimore Technologies develops and markets security products and services that enable companies to develop secure systems for e-business.
