London, July 9 (Bloomberg) ' Marconi, which became the UK's largest phone equipment manufacturer thr...
London, July 9 (Bloomberg) ' Marconi, which became the UK's largest phone equipment manufacturer through $8bn of acquisitions in three years, may become a takeover target after its shares fell 59% last week.
John Mayo, deputy chief executive, who helped arrange those purchases and who was to replace chief executive George Simpson, resigned on 6 July after the firm announced falling sales will cut profits in half for the year ending in March.
Simpson, who was due to become chairman on 18 July, will stay on as CEO. However, investors want him to sell the company and get out.
'This is one of the biggest management cock-ups in the industry,' said Michael Kraland, who helps manage $95m at Paris-based Trinity Capital Partners, which owns stock in Marconi's rivals, such as Cisco Systems. 'It will have to sell the business.'
'Simpson is the chief executive, even though Mayo was the brains behind the strange acquisitions,' said Per Lindberg, an analyst at Dresdner Kleinwort Wasserstein. 'He is ultimately responsible.'
Marconi's shares rose as much as 5.25p, or 5%, to 109.75p. They fell 59% in the first week of July after the company's sales and profit statement. As recently as May, executives said the company would weather the slowing US economy and forecast a rise in sales for fiscal 2002. Its shares fell to 104.5p on 6 July.
Marconi may become a target for firms such as Cisco and Alcatel, according to investors.
Marconi is an international company which specialises in the information technology and the global communications marketplace. The group develops and supplies data networking equipment and solutions to telecommunications operators and ISPs. Marconi's other operations include information system solutions, and capital businesses which provide funding for investments.
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