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Marconi reviews business
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July 18, 2001: 11:14 a.m. ET
UK telecoms equipment maker tells annual meeting of strategic review
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LONDON (CNN) - Executives of the troubled UK telecoms equipment maker, Marconi, faced calls from shareholders and unions on Wednesday to resign.
Chief Executive George Simpson was the target of criticism over his leadership of the company, which issued a profit warning and more job cuts on July 4 after forecasting an upturn, sending its shares into a tailspin.
Small shareholders outside the annual general meeting opposite parliament told CNN how fortunes had crumbled.
"My holding was worth £23,000 and now its worth nothing," said one shareholder, saying "Marconi came into the telecom market too late. It's a very small fish in a big pond. The Board should go."
The meeting came as Marconi (MONI) shares languish at a 20-year low of under 100 pence, and less than one-tenth of their all-time high of £12.76 just last August.
Roger Lyons, head of the Manufacturing, Science & Finance union, told reporters outside the shareholder meeting: "This once great company has been turned into a shell of what it used to be. The board should go not the workforce they deserve better."
As the meeting got underway, the company said that it was beginning an operational review to try and revive the company's fortune.
Simpson said the review would seek to get "back to the basics," cut costs, generate cash and take a fresh look at non-core operations.
Marconi's deputy chief executive, John Mayo, has already resigned over the handling of the profit warning that was preceded by the company suspending its own shares.
The company then announced 4,000 more job cuts, a 15 percent drop in sales forecasts, and a 50 percent plunge in operating profit to March 2002 from the previous year's £702 million.
The warning slashed some £3.5 billion ($4.9 billion) from Marconi's market value the next day.
Investors want heads to roll
Some investors say they want more heads to roll. Among them is the company's most prominent shareholder, Lord Weinstock, who built up the General Electric Company (GEC) that was renamed Marconi two years ago.
A spokesman for Weinstock said he was planning to vote against the re-election of two non-executive directors, Raymond Seitz and Alan Rudge.
Weinstock, who owns up to 40 million Marconi shares and retains an office at its headquarters, intended to support the re-election of George Simpson as chief executive, however, but wants further board changes, his spokesman said.
He believes Marconi should bring back Peter Gershon, a former GEC divisional manager who currently heads the UK government's procurement body, the Office of Government Commerce, the spokesman added.
Weinstock has no plans to attend the meeting or send someone to speak on his behalf, but sacked deputy CEO Mayo said he intends to be on the meeting-room floor.
He is reported to be keen to put his side of the story over the decision to suspend Marconi's shares from trading for a day ahead of the warning.
The 45-year-old was supposed to take over from Simpson as CEO at the meeting.
Marconi has sold businesses worth more than £9 billion ($12.9 billion) as it raised funds to turn itself into a purely high-speed telecoms equipment company.
Marconi, changed it name from GEC, after selling its defence business to BAE Systems for £7.7 billion in November 1999.
"The biggest mistake Marconi made was putting all their eggs in the telecom basket and the eggs are now scrambled," MSF's Lyons said. 
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