Marconi stops taking in water
Shows signs of stability
Marconi has reported second quarter results in line with reduced expectations, giving some signs of stability at the end of an 'Annus Horribilis' for the struggling telecoms manufacturer.
The firm reported an operating profit of £5 million for its second quarter ending September 30, compared to a loss of £227 million in its first quarter. Q2 sales came in at £1,444 million, down 24 per cent on the £1,899 million for the same quarter last year.
In July, Marconi suspended its shares ahead of a profit warning and collapse in its share value (trading at 26.5p today against a high of £12.50 in August 2000) that eventually forced chairman Sir Roger Hurn and chief exec Lord Simpson to quit. Mike Parton, former head of Marconi's networks division, has become chief executive and is overseeing Marconi's cost reduction and restructuring program, which it reports is progressing well.
During September, a further 630 employees left Marconi as part of the Company's cost reduction programme, bringing the total number of workers left the firm to 6,600 (1,625 of these workers were transferred to Jabil Circuit but were most were made redundant). The restructuring plan calls for the loss of 12,000 jobs in total.
In a statement, Marconi said market conditions remain difficult and it was not able to give sales or operating profit guidance for the full year.
However the firm reiterated its target of reducing the operating costs in its core business by £1 billion per annum and reducing its net debt to between £2.7 billion and £3.2 billion by March 2002.
On 10 October, Marconi received US regulatory approval for the disposal of its Medical Systems business to Philips. This transaction remains subject to European Union regulatory approval. ®
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