Marconi Corporation plc
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The Marconi Corporation plc is a radio, telecommunication, and internet equipment manufacturing company, formerly known as The General Electric Company (GEC) and Marconi plc.
Marconi Corporation should not be confused with the Marconi Company founded by Guglielmo Marconi. That company became part of English Electric in 1946, itself bought by GEC in 1968. The Marconi brand was widely used inside the GEC conglomerate, for example Marconi Electronic Systems and the joint ventures Alenia Marconi Systems and Matra Marconi Space.
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History
Marconi plc was formed following a major reorganisation of GEC. Beginning in December 1998 reports emerged that GEC wished to demerge its defence business, Marconi Electronic Systems. This was against the background of a review into the company's future and consolidation of the American and European defence markets.
British Aerospace, until that point pursuing a merger with DASA, soon began merger talks with GEC. On January 19 1999 GEC and BAe announced that BAe was to acquire Marconi Electronic Systems for £7.7bn ($12.75bn). While the deal was yet to be completed GEC used proceeds of the MES sale (as well as heavy borrowing) to finance acquisitions during 1999. This was part of a major realigment of the firm to become a radio, telecommunications, and internet equipment manufacturing company. GEC purchased Reltec for £1.3bn in March and FORE Systems for £2.8bn in April.
British Aerospace completed its purchase of MES on November 30, 1999 to form BAE Systems. GEC announced that it was to be renamed Marconi plc.
Burst of the bubble
Marconi enjoyed early success, by September 2000 shares reached a high of £12.50. However this spending spree was to cause major problems for Marconi as the purchases were at a premium (approaching the height of the dot-com boom). During the 2000/2001 period the dot-com and telecoms industries suffered major downturns. Marconi's orderbook began to dry up as major clients such as the BT Group cut spending dramatically. On Wednesday July 4 2001 Marconi suspended trading of its shares, announced 4,000 job cuts and issued a profits warning. The following day the company's share price crashed 54%, in part due to the alarm caused by the suspension of trading.
In September 2001 Marconi issued a second profits warning. This forced the resignation of CEO George Simpson and Chairman Sir Roger Hurn (Finance Director John Mayo was forced earlier).
Reorganisation
New management started the task of reducing the company's debts and in November detailed the scale of the company's downturn, losses of over £5bn (against sales of £2.5bn) and a net value of £867m (£25bn in 2000).
On Monday March 19 2003 shares in the newly restructured Marconi Corporation started trading. In a debt for equity swap shareholders were given 0.5% of the new company, the rest of the shares were held by the company's creditors.
In September 2004 Marconi announced it had settled its remaining debts, at one stage over £4bn.
In April 2005 it was announced that Marconi had failed to win a major contract to provide telecommunications equipment to BT (BT accounted for 25% of Marconi's business), this caused the share price to drop 40% in one day and led to the announcement of 800 job losses and the closure of their Liverpool factory.
Timeline
- 1897 — Guglielmo Marconi founded the Wireless Telegraph and Signal Company
- 1900 — Renamed to Marconi's Wireless Telegraph Company
- 1946 — Marconi's Wireless Telegraph Company taken over by English Electric
- 1968 — English Electric merges with the General Electric Company (GEC, not to be confused with GE)
- 1999 — GEC acquires Reltec Corporation.
- 1999 — GEC acquires Fore Systems, a major network equipment manufacturer.
- 1999 — After a period of restructuring, during which the Marconi defence business is sold to British Aerospace, GEC renames itself Marconi Plc.
- July 2001 - Profits warning and 4,000 job cuts announced
- September 2001 - CEO Simpson and Finance Director Mayo leave the company in disgrace following second profits warning.
- May 2002 — The company announces a loss of £5.7bn, the biggest in British corporate history.
- May 2003 — Marconi plc renamed Marconi Corporation plc, company restructured giving creditors 99.5% of the shares.
- September 2004 — Marconi corporation plc return to profit with positive cash flow.
- April 2005 — Marconi fails to win large contract with BT resulting in 40% drop in share price and 800 redundancies.
Notes
There are many companies that have Marconi in their name. This is mainly due to various diversification and consolidation over the history of the group. For example, several defense industry partnerships bearing the name "Marconi" are no longer associated with Marconi PLC following GEC's sale of its defense interests and merging of its communications groups to form Marconi Communications before the group's evolution to Marconi PLC.
See also
External links
- Company website (http://www.marconi.com/)
- Yahoo! - Marconi Corporation plc Company Profile (http://biz.yahoo.com/ic/41/41750.html)