The troubled telecoms equipment supplier predicts that revenue in the current year will show mid-single digit growth on a constant currency basis and sees prospect for further expansion in 2006.
Marconi had already warned that its target of a 34% gross margin for this year would be challenging. But with sales at its high margin broadband routing and switching products on the slide, it now expects the margin for the full year to be at the lower end of the 33% to 34% range.
In its third quarter to December 31, the net loss was 21m pounds ($39m), down from a loss of 83m pounds ($154.2m) on revenue 19.1% lower at 330m pounds ($612.9m). Discontinued operations exaggerated the company’s decline and on the basis of continuing operations, sales increased 3.4%.
Marconi is not alone in its difficulties. Last month, Siemens AG announced plans to cut 1,350 jobs in its loss-making fixed networks division while Alcatel SA took a stock market hammering earlier this months when it revealed its margins were under pressure.
However, in a world of consolidating carriers, Marconi does not have the scale to make an impact in what is still a tricky market and a merger with Siemens information and communications business, or China’s Huawei Technologies Co Ltd, with whom it has a reseller agreement, looks the only route to long-term survival.
