NCipher to return £65 million cash to shareholders

NCipher to return £65 million cash to shareholders

Hardware security vendor nCipher is to return £65 million cash to shareholders as the valuation of potential acquisitions continues to fall. The company made the announcement as cost-cutting measures took effect to curb third quarter operating losses on declining year-on-year revenues.

Total revenues for the quarter ended 30 September 2002 (Q3 2002) were up 1.5% to £2.8m, from the previous quarter but 6.9% lower than a year ago. Rising income from the US markets was countered by depressed market conditions in EMEA and Japan.

The operating loss at £1.7m was both lower than that reported in Q2 2002 (£2.4m), and in Q3 2001 (£2.4m).

Quarterly cash burn was also reduced to £0.1 million, as the company cut its headcount from 156 staff to 135 and closed two satellite offices in the US.

The company, which numbers Barclays Bank and Microsoft among its blue chip customers, last month entered the emerging online payment processing market with the launch of payShield, claimed to be the first hardware security module to satisfy both the cryptographic security and performance requirements of MasterCard SecureCode and Visa's Verified by Visa online authentication programmes.

Reporting the results, Alex van Someren, nCipher CEO says he expects market conditions to remain challenging in the next six months. He says the company remains committed to its market strategy of expanding the business through organic growth supplemented by acqusitions.

"However, market conditions and the valuations of potential acquisition targets have changed significantly since we raised funds at our IPO," he says. "This has resulted in nCipher holding cash in excess of the amount required to execute our strategy; consequently the board has decided to commence a process with a view to returning £65million of cash to shareholders."

Ncipher follows derivatives stock trading firm patsystems in returning excessive cash holdings to shareholders as the tech stock boom evaporates.

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