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Financial

Marconi Tanks Big Time

Investors in Marconi PLC (Nasdaq/London: MONI) are running for the exits following news that the company's efforts to arrange emergency bank financing have run into problems.

As a result, Marconi's shareprice plunged 47 percent on the London Stock Exchange today, reaching a new low of 9.55 UK pence (13.6 US cents). This makes the company worth a mere $380 million -- a tiny fraction of the $49 billion it was worth in the year 2000.

In a trading statement this morning, Marconi said that it was unable to enter into a new financing facility that it had been negotiating with banks, because market conditions were worse than it had anticipated and showed no signs of improvement in the company's financial year ending March 2003 (see Marconi Gives Trading Update).

Marconi says that it will develop a revised business plan in the next few weeks while continuing to discuss refinancing options. The company's fate appears to be hanging by a thread.

— Peter Heywood, Founding Editor, Light Reading
http://www.lightreading.com
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lilgatsby 12/4/2012 | 10:44:55 PM
re: Marconi Tanks Big Time Someone might want to tell the start-up chaps down under to hold off buying the soliton science project across Australia...if they wait a few weeks they might be able to purchase all of Marconi for the same price.
zweisel 12/4/2012 | 10:44:55 PM
re: Marconi Tanks Big Time What is the Soliton Science project?
Titanic Optics 12/4/2012 | 10:44:54 PM
re: Marconi Tanks Big Time I can't see that the UK will let this company go down the tubes as it has nearly 50,000 employees.

Yes, this isn't the Britain of the 1970s with its state run enterprises, but I can't see it as a free-wheeling bastion of capitalism when it comes to jobs.

Anybody got a theory on what the future holds for Marconi?
Titanic Optics 12/4/2012 | 10:44:54 PM
re: Marconi Tanks Big Time A more up-to-date headcount is 25,000 and shrinking...
Peter Heywood 12/4/2012 | 10:44:53 PM
re: Marconi Tanks Big Time It may have something to do with this:

http://www.lightreading.com/do...

lilgatsby 12/4/2012 | 10:44:51 PM
re: Marconi Tanks Big Time Bravo, PH. It is unfortunate to see a company tank like MONI. It is also unfortunate to see a company preach a technology that only works in the canals of Europe or cool science experiments in Solstis-MONI labs.

Ever seen a field deployed soliton network? I recall a company in Canada that tried to make it work in '99, but believe it ended up in the trash heap next to some old Synoptics boxes and a couple Wellfleet nuts and bolts. This particular science experiment was a mere $3.2 billion. How many Loonies is that, Roth?
CRC_Check 12/4/2012 | 10:44:44 PM
re: Marconi Tanks Big Time Poor Marconi, so much cash for FORE, and damnable unfortunate timing in the takeover. Seems no amount of hard work can turn the tide; now which is a real shame.

In hindsight, I wonder what would have happened if Robert Samson, Francois Bitz and the rest would have invested in FORE as a going concern...instead of cashing in. Would they have surpassed LU, NT and Newbridge/ALA switching during the subsequent downturn. Maybe they cashed in just when the going got interesting?

C
Kangaroo 12/4/2012 | 10:44:42 PM
re: Marconi Tanks Big Time Peter Heywood wrote...
It may have something to do with this:

http://www.lightreading.com/do...

-------------

Please note that the "win" that they had in Australia is Vendor Financed by Marconi.

belas_knap 12/4/2012 | 10:44:41 PM
re: Marconi Tanks Big Time So I agree, I can't see Marconi going completely out of business since (rather than the Govt) BT - amongst others - won't allow it. Most of BT's core Optical & Voice network is Marconi based for one, as are many UK & some European carriers. However, it is clear that Marconi cannot survive on its current business model with headcount the way it is, and revenues (and in particular margins) so low. I suspect the VC firms - as well as a couple of competitors & customers - are already circling. I can't see the group surviving as it is today, but broken up into 5 or 6 smaller segments. Its Optical, Voice & Systems Integration/Maintenance businesses could look attractive to investors looking at turning the company around, particularly with some of the existing contracts & customer base Marconi already has. The technology groups are reasonably good in terms of engineering (if not a little behind the times in terms of newer technology but this ismore to do with lack of investment of R&D dollars), but the Sales/Marketing/commercial are the achilles heel & could be turned around. With a strong industry name behind it, customers who aren't buying because of fear Marconi may go bust could start buying the equipment again. But a 40,000 unionised headcount is a real headache....
Peter Heywood 12/4/2012 | 10:44:29 PM
re: Marconi Tanks Big Time Okay...so how would you dismember Marconi and who would buy the various bits?

Doesn't Marconi have quite a strong position in the SDH market? Aren't some other vendors (Ericsson?) selling Marconi SDH equipment?
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