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April 22, 2004

Marconi expects broadband to drive growth

Recovering telecoms equipment maker Marconi Plc has predicted a "stabilizing market" during the coming financial year. It has also earmarked the take-up of broadband as one of the major drivers to fuel a return to sales growth for the first time in four years.

By CBR Staff Writer

In a trading update, Marconi announced a 1% increase in fourth-quarter sales to 378m pounds ($669.9m), up from 374m pounds ($662.8m) in the third quarter. It also said the rise over the third quarter would have reached 6% without currency fluctuations.

Marconi is recovering from near-collapse after the recent spending freeze within the telecoms sector. Last year, it re-emerged after axing about 6,000 jobs and agreeing a 4bn-pound restructuring which gave 99.5% of the company to its creditors.

Looking forward. Marconi believes the market is stabilizing, although it admitted it remains difficult to accurately predict the timing and volume of deliveries. For its current financial year, Marconi sees the potential for low single-digit growth in sales.

We see broadband access as the thing that’s going to kick-start the industry, said chief executive Mike Parton. We see broadband access, with sales of our access hub, as the thing that’s going to provide us growth in the next 12 months.

Parton also said Marconi is looking to Softswitch, a product that allows customers to take voice calls over the internet with no loss of quality, to be the next growth engine after broadband.

Marconi recently sold its US access group for approximately $240m in cash and used the proceeds to pay off debts. It debts stand at 265m pounds ($468.5m), compared with a net debt of 750m pounds ($1.32bn) at the time of last year’s financial restructuring.

It said sales in the first quarter of the 2004/5 financial year are expected to be flat against the 342m pounds ($604.6m) recorded in last year’s first quarter. During the quarter, headcount fell to 12,425, from 12,775 at the end of 2003.

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This article is based on material originally published by ComputerWire

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