U.K. telecommunication equipment maker Marconi Corp. PLC announced Tuesday it has accepted the immediate resignation of its top two executives following its decision to cut an additional 2,000 jobs on top of the 8,000 job cuts already announced this year.
The restructuring comes as a result of further losses for the London-based company, which reported a first quarter operating loss of 227 million pounds (US$321 million, as of June 30, the last day of the first quarter), Marconi said in a statement.
Marconi Chairman Roger Hurn and Chief Executive George Simpson have resigned and have already been replaced by Derek Bonham as interim chairman and Mike Parton as the new chief executive, Marconi said. Parton was formerly the head of Marconi's networks division, the company said.
As a result of its continuing decline in sales, Marconi does not expect to break even in the first half of its fiscal year as it had reported in July when it announced a restructuring of the company. Instead, Marconi forecasted it will post an operating loss of around 227 million pounds for the first half of its fiscal year. Marconi does expect to break even in the second quarter on an operating level, the company said.
Sales in the first quarter were 1.1 billion pounds, a 12 percent decline from sales of 1.3 billion in the first quarter of last year and just over half of the 2.1 billion pounds in sales recorded in the fourth quarter of last year, Marconi said.
In July, the telecom and enterprise equipment manufacturer announced it was laying off 4,000 employees on top of the 4,000 job cuts it had already announced in April. At the time, Marconi had predicted a 50-percent drop in its operating profit for the financial year ending March 31, 2002, and was looking to bring about annual savings of over 200 million pounds by 2003 by closing down some of its facilities and laying off workers.
Those plans were knocked off course when the "speed of sales reduction" in its market outpaced its cost-cutting plans, Marconi said. Sales have already begun to show signs of recovery in the second quarter, though they are "below our earlier expectations," Marconi said.
As a result of its completed operational review, Marconi will now refocus operations on its core network communications businesses while continuing to implement cost- and debt-cutting measures, the company said. Marconi will also reevaluate its noncore activities, the company said.
Marconi will focus its operational efforts on its SDH/DWDM (synchronous digital hierarchy/dense wavelength division multiplexing) optical networks, high capacity packet switches, broadband access software platforms as well as the software and support services for these products, the company said.
Marconi will take a one-time charge of 3 billion pounds to 3.5 billion pounds on Sept. 30 against recent acquisitions and revise its forecasted annual cost saving to 600 million pounds, Marconi said.
The company recorded a net debt of 4.4 billion pounds as of Aug. 31, up from 3.2 billion pounds at the end of March, though the debt level has stabilized, Marconi said. The company blamed a first-quarter operating cash outflow of 553 million pounds for the increase in debt.
Trading of the company's (MONI.LON) shares on the London Stock Exchange at one point hit an all-time low of 0.50 pounds per share before recovering somewhat by early afternoon on Tuesday to trade at 0.5425 pounds per share, an increase of 0.46 percent from its Monday closing price of 0.54 pounds per share.
When Marconi announced its review in July, the company was forced to halt the trading of its shares for a period, after which the value of it shares fell by half to 1.125 pounds when trading resumed. Shares in Marconi had experienced a 52-week high of 12.50 pounds.