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Restructuring costs bite

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Revenues at Marconi remain "stable", the UK telecoms equipment maker announced today.

Takings from continuing operations for the three months to the end of June (Q1) were £285m compared to £289m during the same period last year.

This was boosted by a strong performance from Marconi's operations in Asia Pacific and an increased rate of broadband access network deployment in the UK. However, this was offset by a decline in data networks in the UK and Italy.

Q1 loss from continuing operations climbed to £36m compared to a loss of £11m last year. Much of this was due to £27m restructuring costs after Marconi failed to win a slice of business from BT's £10bn investment in its new 21st Century Network (21CN).

As a result, Marconi announced plans in May to axe 800 workers in the UK, a move that was widely expected following Marconi's failure to become a preferred supplier for 21CN.

Although BT had said Marconi's telecoms gear was up to scratch, the UK's dominant fixed-line telco said that Marconi's price just wasn't competitive.

The restructuring is expected to give Marconi room to "dismantle much of the current UK-based central operations organisation leading to significant cost savings". The company is also looking at introducing other "overhead cost reduction initiatives" across the whole business in a bid to save money.

Speaking today Marconi chief exec Mike Parton said that despite recent set backs the company's order book looked "healthy".

"We achieved solid results in the quarter despite a very competitive marketplace. We have seen new wins for our next-generation products with customers such as Cable and Wireless and Vodafone.

"Despite continuous and significant changes in our industry's dynamics the business has been stabilised giving us the opportunity to consider the best future from this stronger base," he said.

By mid morning shares in Marconi were down 4.85p at 268.65p. ®

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