Rupert Goodwins' Diary
Friday 29/4/2005
Long faces at Marconi, as BT's decision not to buy any of the company's kit for its huge 21CN network initiative has halved the share price and led to predictions of the company being broken up and sold off in bits. A special mention must go to analysts at Dresdener Kleinwort Wasserstein who said immediately before the contract announcement that Marconi was "so advanced with its products and so entrenched with BT Group plc that its selection looks certain". The crew at DKW went on to predict a large slice of the contract going Marconi's way, with the company picking up the lion's share of the softswitching work as well as substantial amounts of the optical networking and upgrade pie. The share price was going to nearly double, so get in quick. As Paxman would say: yeeeerse.
Marconi has fallen a long way. In the 70s and 80s, the company was repeatedly criticised for sitting on a huge pile of cash, accumulated and guarded by legendary chief executive Lord Arnie Weinstock. Stung by this and conscious that its military cash cows were being put out to pasture, the company decided to get jiggy with it and bought up oodles of expensive telecoms stuff just before the dot-com bubble burst. The resulting meltdown was spectacular. There had been hope that lessons had been learned, and the company had acquired the necessary commercial skills to go head to head with its competitors on price and features, but it seems not to be. This time last week it was a £1bn company with a full quarter of its revenues coming from BT: today, it's worth £500m and won't be providing so much as a cats' whisker to its once-largest client. Oops.
The most intriguing rumour going around at the moment is that one of the 21CN winners, Chinese vendor Huawei Technologies, might be about to buy Marconi. As telecomms networking industry Web site Light Reading points out, Huawei has virtually no experience with BT and has only a smattering of UK staff on the ground — but it'll need some very, very quickly. Marconi has oodles of both, and is now available at an absolute bargain price. Marconi also has great contacts with the rest of the European telecommunications industry, which is exactly what a growing young Oriental company needs.
Hmm. A Chinese takeover of a once great British manufacturing company? Who'd have thought it.
(Meanwhile, The Reg reports that kebab issues are the least of Google Maps idiosyncrasies. Don't even think about looking for French or Spanish nosh.... burgers are on the menu, though. Bon appetit).