struggling UK TELECOMS FIRM BLAMES SALES SLUMP AS IT PREPARES TO MAKE FURTHER CUTBACKS FOLLOWING decrease IN VALUATION TO BELOW £1BN
Marconi, whose shares fell 94% last year, said it may cut 4,000 more jobs at its phone-equipment business, after sales of network equipment fell in the third-quarter of 2001.
Revenue from phone equipment in the three months ending 31 December, 2001 fell 37% to £706m, from £1.12bn a year earlier. The UK telecoms firm had an operating loss of £130m at its biggest unit.
'The outlook is still very difficult,'' said chief executive officer Michael Parton. 'I don't expect to see any improvement in the market as a whole in 2002 and 2003 is too far away at the moment to give any indication.'
Marconi, whose businesses once ranged from missiles to kitchen appliances, shifted focus to telecommunications equipment in 1999. The strategy backfired, however, when economic growth faltered and European phone companies, burdened with debt after spending some $100bn on wireless licenses, cut spending.
Shares fell sharply on the news, valuing Marconi at less than £1bn. The decline during 2001 wiped £18bn off its market value.
Parton, who replaced George Simpson last September, has been selling assets to cut debt. Like larger rivals, such as Nortel Networks and Alcatel, Marconi is slashing thousands of jobs to stem losses. The company lost £5.1bn in the six months ending 30 September 2001. Debt fell to £3.5bn at the end of December from £4.3bn on 30 September 2001. The company said it is on track to reach its target to reduce debt to between £2.7bn and £3.2bn by 31 March.
On 17 January, Marconi said it paid about £110m to buy back more of its euro- and dollar-denominated bonds to help reduce debt.
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