Marconi plunges on missed BT deal

Fiber Optics Weekly Update, May 13, 2005

In the last issue of Fiber Optics Weekly Update, we reported BT's announcement of its preferred suppliers for its 21st Century Network. One noticeable absence from the list is Marconi.

Shares in Marconi lost nearly 40 percent of their value on the day after the telecom equipment provider failed to win any part of a landmark [pounds sterling]10 billion ($19 billion) contract to build the new network for BT Group.

Marconi warned that some 2,000 employees at its U.K. research and development operations could now be facing job losses as a result, and analysts have become concerned about the company's ability to survive as an independent entity.

Marconi had been widely expected to win a substantial part of the work. "This is a disappointing outcome from a very competitive tender process," said Mike Parton, chief executive of Marconi. "Our products performed extremely well technically but we have been unable to meet BT's commercial requirements."

"This will do significant long-term damage to Marconi," said Richard Windsor, analyst at Nomura. "BT is the company's biggest customer and the fact that Marconi has not won a contract sends out a bad signal. Marconi may lose a lot of future business through this."

Analysts said the decision indicated Marconi could be too small to compete on an international scale.