Marconi's first quarter sales have almost halved to £592 million from £1,134 million last year as it struggles to restructure its business amidst the continuing slump in telecoms spending.

The company said its decline in sales was largely due to the disposal of businesses from Marconi Capital during the second half of its last financial year. During that time Marconi offloaded its Medical, Commerce and Data Systems division and a 50 per cent stake in its General Domestic Appliances.

However a 22 per cent fall in sales by its core telecoms equipment business to £510 million, also hit Marconi's bottom line. Sales in the US were especially poor, and with continued reductions in carrier spending forecast, Marconi is hoping to make inroads in UK and Italian markets, where conditions are stabilising.

During the quarter Marconi shed a further 3,000 workers. Since July 2001, 10,000 workers have lost their jobs at the once prosperous firm, whose shares are trading a 2 per cent of the level they reached during the height of dot com hysteria.

Marconi is paying the price for an ill-advised spending spree, which left it, saddled with enormous debts and declining sales. On June 30 the company's net debt stood at £3 billion, up £152 million during the quarter because of operating cash outflow, exceptional restructuring costs and interest payments. ®