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Marconi: Underneath the mess, some good technology

Underneath the dung there's some good grass, but the cows still don't eat there...
Written by Ben King, Contributor

Underneath the dung there's some good grass, but the cows still don't eat there...

Marconi has been taking solid stick in the press for the past 12 months, as the share price falls and the company plunges towards bankruptcy. The irony is, though, that most of the phone calls those journalists made while researching those articles will have gone over Marconi equipment - and many of their internet searches will have passed through a Marconi box too. In the transmission market, the part of the telecoms business which takes information long distances from hub to hub, Marconi remains a world-class company with a very large installed base of equipment around the world. Roger Runswick, director of consultancy Schema, told silicon.com: "They're a strong, successful company, and before the bottom of the market fell out, they were doing well." Iain Stevenson, Ovum's research director for next-generation networks, agreed. "Their ATM stuff is good, their transmission stuff is good, and their voice switching is good," he said. Marconi's DWDM and SDH optical equipment, and the operational support systems which operators use to control networks, remains a very strong product, he said. He added: "If they can pull out of the current mess then there is only one way to go and that is up. But Marconi potentially has a lot going for it." No matter how good the product, a well-publicised string of bad management failures, and the collapse of the telecoms equipment market, have left Marconi on the verge of bankruptcy. Without significant further funding, Marconi will find it hard to invest in research to keep up with the industry leader. Ovum's Stevenson said: "What they are doing is going in a different direction from the rest of the market. The rest of the market is going towards IP based next generation networks, which is not where Marconi is going." Also, many big telecoms equipment deals are made possible by a large financing package from the vendor - which Marconi is no longer in a position to supply. However, says Stevenson, Marconi has strong relationships with many of the incumbent telcos, such as BT and Deutsche Telekom - a valuable asset which a company like Cisco doesn't have. A takeover of Marconi remains a likely option, but a buyer would be looking to acquire market share, rather than technology. "There's nothing unique in Marconi's technology," said Schema's Runswick. "But there is a lot of history and capability buried under there that is hard to ignore." Potential buyers, such as Cisco and Alcatel, are short of cash, and they will feel little pressure to rush in as the price of Marconi or its assets is likely to get cheaper.
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