General Electric Co Plc says it now wants to become a major player in the telecommunications market and has rejected a plan to sell its stake in GPT Communications Systems Ltd, its joint venture with Siemens AG. But its relationship with Siemens may change dramatically as GEC has turned away from its old policy of joint ventures to concentrate on managed businesses with the intention of building each into a market leader. Announcing a new strategy to take it forward to the next century, managing director George Simpson said it was considering repositioning GPT in which it has a 60% stake and Siemens 40%. Clearly one option was to sell our stake to Siemens. But I am driven by shareholder value. We will monitor the business and rewrite the charter for that business as telecoms is a high growth area which GEC should remain in, he said. However, the company’s conservative policies over many years, which have seen it ignore the massive opportunities in markets like mobile phones, leave it with a huge amount of ground to make up. Since GEC won’t sell out to Siemens, the obvious way of repositioning would be to buy out Siemens stake – which would hardly leave the German company heartbroken since it already has a competitive range of telecoms products in its own right. The center of GEC’s strategy is to turn its Marconi defense operation into a global player and to focus the group’s industrial and communications activities on existing or potential global leadership positions. One benefit of the timid past policies is that GEC is now sitting on a 2bn pound cash pile and the company says it will spend it on investment and acquisition opportunities. Pre-tax profits have increased from #981m to #1,010m but GEC has always made money from lucrative defense contracts and has yet to show it can survive in really competitive markets.
