LONDON-Following news that it was not selected as a preferred supplier for British Telecom’s huge 21st Century Network project, U.K. equipment vendor Marconi Corp. said it will lay off workers, refocus its business and continue to examine its strategic alternatives.
“BT’s omission of Marconi from its list of preferred vendors for its 21st Century Network (21CN) has made a huge impact on the company,” said Julian Hewett, chief analyst at Ovum. Hewett noted the company’s stock has fallen 40 percent since the announcement.
“Substantial job cuts are expected, and the future of Marconi as an independent business seems uncertain,” said Hewett. “The hard fact is that telecoms equipment is a global market. And a global footprint will become even more important in an ‘all-IP, next-generation’ world in which the basic components are standardized.
“In our view, Marconi now has no future as an independent telecom equipment vendor,” said Hewett, who mentioned Ericsson, Siemens and Alcatel as the most obvious potential acquirers, as well as Cisco, Lucent, Nortel and Huawei as more distant possibilities. “Its credibility with other telcos has been shattered by failing to get on BT’s preferred list of vendors.”
In a statement, Marconi reiterated that it has several contracts with leading telecom operators, including other contracts for equipment and services with BT that remain in place. The company said it plans to shortly announce the results of its headcount and operations review. The company’s full-year and fourth-quarter financial results are expected to be released May 17.
“This is a disappointing outcome from a very competitive tender process,” said Mike Parton, chief executive of Marconi, in response to BT’s decision. “Our products performed extremely well technically, but we have been unable to meet BT’s commercial requirements.”
