The warning dragged down bourses throughout Europe on Thursday. In France, the CAC-40 index was down 69.02 at 5,106.11 at mid-morning. In London the FTSE 100 index was down 74.2 at 5526.3 at mid-morning. Technology stocks across the board were down, with Spirent, which makes telecommunications testing equipment, particularly hard hit, falling nearly 6 per cent.
In Germany the DAX 30 index was down 35.43 at 5,981.02, and the Neuer Markt all-share index was down 44.29 at 1,389.76. Siemens, the electronics company, was down more than 3% at EUR68.88.
Marconi’s profits warning came more than two hours after the normal end of London trading on Wednesday. The company said that tougher trading conditions in the three months to June meant that sales for the year would be 15 per cent lower than last year. Operating profit before exceptionals would be down by 50 per cent in the twelve months to March 2002.
In an attempt to restore calm, Lord Simpson, who is due to step down as chief executive later this year declared in a statement to the press, Can I make it absolutely clear, Marconi is financially sound. However, several of the company’s leading investors said they were deeply concerned about the profits warning and the company’s decision to suspend trading of its shares for the entire London trading session.
Marconi’s management credibility is already in question following controversial plans to reprice its share options. That plan is due to be voted on by shareholders on July 18 at the annual general meeting. This latest crises has cast huge doubt over the position of Lord Simpson, with many leading shareholders calling for blood.
Although Marconi said it would cut 3,000 jobs, and 1,000 management positions, there are no plans for any senior executive to stand down. These job cuts are in addition to 3,000 the group had already announced.
Marconi executives had argued as recently as May that its greater exposure to the European market would help insulate it from the worst effects of the downturn in spending on telecoms equipment. But the company said on Wednesday this was no longer the case.
