Baltimore's Visa deal fails to swing investors

A cool reception by investors to a deal linking credit card association Visa and Internet security firm Baltimore Technologies did little yesterday to raise the Dublin company's hopes of retaining its place in the FTSE 100 index on the London exchange.

Baltimore's share lost 2.84 per cent to close at £5.65 in London, well off its £15 high on February 3rd, just before it joined the index of 100 leading shares.

Despite gains last week, the stock finished yesterday at 118th on the index, which will be redrawn according to market capitalisation of quoted companies at the close of business today.

With only today's trading left before FTSE, the index manager, examines its composition, Baltimore is in demotion territory, because stocks valued lower than the top 110 firms will be dropped.

Investors on the technology-heavy Nasdaq exchange in New York also failed to warm to yesterday's deal, which will see Baltimore systems used by Visa merchants and member banks, in the US initially, to authenticate and secure Internet payments. By lunchtime in New York, the stock was trading at just under $18 on the Nasdaq, 2.38 per cent lower than its previous close.

The deal, which will enable Visa to operate a digital certificate network to validate online payments, is believed to be worth about $400,000 (€424,043) initially. The introduction of the system begins immediately, Baltimore's chief executive, Mr Fran Rooney, said yesterday.

Baltimore is believed to have signed a similar deal late last year with payment card company American Express, although neither formally announced the agreement.

Mr Rooney said the deal with Visa had been in negotiation for some time and was closely linked to its control of the US e-commerce security group, CyberTrust, acquired last January from GTE Corporation for $150 million.

"The deal came out of the Cyber Trust relationship . . . the most significant part is that it gives us profile in the US," said Mr Rooney.

Asked whether there was any connection between yesterday's announcement and FTSE 100's examination of market capitalisation based on today's closing prices, Mr Rooney said Baltimore "would typically announce any deal at the first opportunity".

The company was taking a long-term view of its share price performance, he said. "We're running a company here, not a stock. While I do care about the investors, I would take a long-term view of this."

In a statement, Visa's vice-president of Internet, Mr Tom Manessis, said: "Validating a digital certificate is the electronic equivalent of a consumer looking for the Visa acceptance flag in a merchant's store window, or a merchant checking the consumer's signature on the back of a Visa card."

Baltimore's membership of the prestigious FTSE 100 is in doubt following a general slump in the value of technology, media and telecoms shares after record gains earlier this year.

Membership of the index, reviewed every three months, is seen as important because large-scale investors such as pension funds use it as a benchmark to track British and world markets.