By BLAINE GRETEMAN | LONDON
Posted Sunday, June 29, 2003; 14.08BST
At age 12, Nicko van Someren was already playing with the algorithms that are now used to secure data at the world's top financial institutions. Ncipher, the company he founded with his brother Alex, has been equally precocious.
In 1996, when banks and stores were unrolling cybershops, Nicko (right) and Alex, now Ncipher's CTO and CEO, saw that existing encryption technology was not up to the task. Although IT security is now a $20 billion business, the point is still valid. In a 2003 survey by Deloitte and Touche, 39% of financial companies questioned said their computer systems had been compromised in the past year; 45% expect to invest in the kind of encryption technology made by Ncipher in the next 18 months.
"My taxi-driver test has changed," says Alex. "Six years ago when I said I ran an IT-security firm they said, 'What?' Now they say 'Wow.'" Standard encryption, says the ponytailed Alex, is like "an armor-plated pipe that connects two places over the Internet," and hackers know credit-card information is secure while it's en route. But it turns out it's "dead easy," Alex says, to swipe the encryption "keys" from companies' servers. So Ncipher developed a safe box for the keys that also speeds up decryption. "It's kind of a Mission: Impossible thing," Alex quips. Of course, smart technology doesn't assure profits — and Ncipher hasn't turned one yet. But in October 2000, it launched one of the penultimate IPOs of the boom, raising $173 million and valuing the firm at $663 million.
Although it returned most of the money to shareholders and its market cap has fallen to $54 million, it is rich enough to make acquisitions that can push it over the hump. Neither is the path to homegrown profits too cryptic. Losses narrowed 15% last year, to $12.6 million, and sales climbed 21% last quarter. Ncipher, unlike the plans on Mission: Impossible, looks unlikely to self-destruct.
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