Marconi saga ends as Hurn and Simpson quit
Another 2000 jobs down the pan too
Two months to the day that Marconi suspended its shares and announced a profit warning that saw shares in the British behemoth plummet, the final bloodletting has come. Chairman Sir Roger Hurn and chief exec Lord Simpson have both quit, but not before announcing a further 2000 job cuts on top of the 10,000 already announced.
There has been much speculation of what would happen once an operational review in the company had been completed. Marconi is on course to announce an operating loss for the first six months, to complement the shock loss of £227 million for the first quarter.
With a review of the FTSE100 companies that looks sure to relegate Marconi for the first time since the index was created in 1984, it became clear to Hurn and Simpson that their positions had become untenable. Hurn was due to retire anyway before the profit warning was announced and Simpson was to step in his shoes as chairman with John Mayo becoming chief exec.
Mayo was sacrificed early on but Simpson has been trying to hold onto his job despite the fury of investors. Now they've bowed to pressure and Mike Parton, former head of the networks division, will become chief exec, and Derek Bonham, a senior non-exec director, will be interim chairman.
The operational review recommended a concentration on four areas: its main network communications business; getting more value out of other business; reducing costs; and cutting Marconi's £4.4 billion debt. And if that seems as obvious as telling you to take your clothes off before you get into the bath, you'd be right. But then seeing as the board has presided over a catastrophic refocusing of the business that saw one of Britain's flagship companies turn into a takeover prospect, maybe it needed things spelt out in black and white.
Hence the extra 2000 job cuts. The total of 12,000 job losses - 25 per cent of its workforce - will see Marconi save £450 million. The company is to be reorganised from a headquarters and three divisions into one single organisation.
Then it will sell off more assets, reduce investment and cut some other overheads to reduce debt to £2.7 billion by March next year.
While shareholders and investors will be glad to see some action and responsibility taken at the top - share price has wobbled up and down since this morning but nothing interesting - unions are furious. They have been trying to insist on meetings with the board but with Simpson and Hurn out the way and new people in, their bargaining position is out the window. ®
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