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MARKET COMMENT
By
Carburton Street, London -- Shares in Baltimore Technologies (LSE: BLM) began to slide in mid-morning as rumours filtered through that Chief Executive Fran Rooney would warn of disappointing first quarter sales in an analysts' briefing this afternoon. The company eventually issued an announcement shortly after 2.30 and the shares fell about 28% to 108p. Going by the price movements and the timing of the announcement, it seems that someone, somewhere had an extra four hours or so to play with the information than we Fools did. That is regrettable to say the least. For shareholders, though, it's not as regrettable as the news that first quarter sales will come in at just £25m. This is around 15% short of forecasts of about £30m and actually less than the fourth quarter of 2000. In the current environment, investors are quick to punish this sort of news, and even more so because of the way it was delivered. Not surprisingly, the excuse was that the software industry in the States is miserable. This has resulted in "some sales being delayed due to the prevailing economic climate". The company went on to claim that continuing demand for its products is "evidenced by a growing customer pipeline". The market took a different view -- that the sales have not so much been delayed as evaporated. So what should shareholders do? Well I can tell you what one of them is doing -- nothing at all! Unfortunately, I took the plunge and topped up my holding last Friday at 180p. But that's what you get in the stock market. It's hard enough to find the right companies to invest in, let alone to get the timing right. Things are clearly pretty tough in the US and some reduced spending in the short term is no surprise. But then I didn't buy my Baltimore shares for the £30m (or rather £25m) it might earn in the current quarter. The view I'm taking is that US economic weakness is a good enough excuse and that Baltimore's long-term prospects remain largely unaffected. If you agree, then the current weakness should be seen as an opportunity.