Profits taken in Baltimore shares

After the phenomenal gains on Friday on the back of speculation that it may join the FTSE 100 index next month, some of the steam went out of Baltimore Technologies on the London and New York markets yesterday. But only after the share had made more early gains.

In London, where the bulk of trading in Baltimore took place, the shares were driven up to a new trading high of £122.50 sterling (€199.03), before some profit-taking brought it back to a close of £110, up 125p on the day. On the Nasdaq, the pattern was the same, although trading volumes were minuscule - the shares spiked up to a high of $183 1/2 before easing back to a $171 level as London closed for the day. At the close on Nasdaq, the shares were on $175, a fall of $1 1/4, or down 0.71 per cent on the day.

While much of Baltimore's extraordinary gain - the shares were trading at no more than £4.15 a few months ago -

has been attributed to the FTSE 100 speculation, some analysts believe a major deal by Baltimore may be in the offing.

This speculation has centred on the Identrus consortium. "We are coming up to the time when Identrus should be announcing who will be doing the production software for them," Beeson Gregory software analyst David Johnson said.

The US-based Identrus network, comprising a growing group of blue chip international banks providing Internet services to help e-commerce, awarded Baltimore the pilot software contract last year and will soon decide who will provide the production software.

On the FTSE 100 speculation, FTSE International said yesterday that the next adjustments to the composition up of the 100-share index will be announced on March 8th and come into effect on March 20th. While market capitalisation is the main factor deciding whether a company's shares are included in the FTSE, liquidity and the size of the free float are other factors, a FTSE International spokesman said.

With a market capitalisation of £4 billion and rising, and with traditional FTSE 100 shares weakening, some analysts believe that Baltimore is in line for an upgrade from its current mid-cap FTSE 250 ranking to the top-ranking FTSE 100. Inclusion in the 100-share index would inevitably raise Baltimore's profile and result in automatic buying of the shares by index funds and pension funds who use the FTSE 100 as a benchmark for their equity market asset allocation.