Certicom refocuses, hopes for brigher future

Wireless security vendor Certicom Corp. is refocusing on sales of its flagship movianVPN and its security tool kits used by other vendors as a way to pull out of financial tailspin.

Following a year of drastic cuts, the company now pins its hopes on government security spending and licensing its technology to chip makers and vendors of handheld wireless devices. It is a pioneer of VPN software for wireless devices. Its movianVPN software is supported by Check Point Software Technologies Ltd., Cisco Systems Inc. and Nortel Networks Corp. as well as other leading VPN vendors. Its main competitor is RSA Security Inc.

Over the past year the company has cut staffing from 400 to 120, moved its headquarters from California to Toronto, moved into smaller quarters, cut R&D on unpromising projects, abandoned its direct sales to enterprises and pulled out of the NASDAQ where it was trading at 70 cents per share.

Over the same period its revenue has dropped from US$26.6 million to $12.3 million while its losses, including one-time hits for downsizing, soared from $40.7 million to $95.8 million.

The company has also jettisoned plans to become a certificate authority. "You're either a product company or you're a service company, but you can't be both," says Tony Rosati, the company's vice president of marketing, who was appointed at the end of April.

By wiping out its enterprise direct sales force and moving into smaller, cheaper real estate, the company has cut operational expenses from $12.9 million in the first quarter of the last fiscal year to a projected $4 million in the first quarter of its fiscal year 2003.

The company has opened a Washington, D.C., sales office to attract U.S. government contracts for its wireless security software. It says it will have federal certification for its products by year-end.

Certicom licenses its software to Motorola Inc. and Texas Instruments Inc., which plans to burn it into chips for handheld devices such as PDAs and cell phones. Certicom plans to expand its management platform for movianVPN as well.

It also plans to push its TrustPoint portal to any vendor's public key infrastructure, making the Certicom product more adaptable to specific deployments.

The company also plans to expand its custom application service that adapts its products to particular customers' needs. For instance, the service adapted Certicom software to XM Radio, a satellite radio company that needed to grant conditional access to users and authenticate devices to its network securely.

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