Marconi Communications

Last updated

Marconi Communications
Company type Subsidiary
Industry telecommunications
Predecessor GEC Plessey Telecommunications (GPT)
Founded1998
Defunct2005
FateAcquired
Successor Ericsson
Telent
Owner GEC (1998–1999)
Marconi plc (1999–2003)
Marconi Corporation plc (2003–2006)

Marconi Communications, the former telecommunications arm of Britain's General Electric Company plc (GEC), was founded in August 1998 through the amalgamation of GEC Plessey Telecommunications (GPT) with other GEC subsidiaries: Marconi SpA, GEC Hong Kong, and ATC South Africa.

Contents

In December 1999, it became the principal subsidiary of Marconi plc, formed by renaming the remainder of GEC when GEC's defence arm, Marconi Electronic Systems, was sold to British Aerospace to form BAE Systems. Marconi plc was restructured to Marconi Corporation plc in May 2003.

Marconi Corporation used the cash raised by selling the defence arm to buy US telecoms companies, with the aim of becoming a major telecommunications systems provider. After losing most of its value in the subsequent dot-com bubble crash, and failing to win major contracts, in 2006 Ericsson acquired a majority of Marconi Corporation. The remainder of Marconi Corporation was renamed Telent.

History

Companies with "Marconi" in their name can trace their origins through a complex history of mergers, takeovers and divisions, to the 1963-established Marconi Company Ltd, founded in 1897 as the Wireless Telegraph & Signal Company by Guglielmo Marconi. The operations of Marconi were amalgamated into GEC in 1968, when GEC acquired the parent company of Marconi, English Electric.

Background: GEC acquisition of Plessey and GPT (1986–1998)

The evolution of Marconi Communications began in 1986, when the General Electric Company (GEC) attempted a takeover of Plessey, a British-based international electronics, defence and telecommunications company founded in 1917. The takeover bid was barred by regulatory authorities. As an amicable solution, GEC and Plessey merged their telecommunications businesses on 1 April 1988 as GEC Plessey Telecommunications (GPT). GPT was a world leader in many fields, for example synchronous digital hierarchy technology, and this brought together the two companies responsible for developing and building the System X telephone exchange, which was supposed to make selling System X simpler.

In 1989, GEC and the German conglomerate Siemens AG acquired the Plessey Company through their joint holding company, GEC Siemens plc. While most of Plessey's assets were divided between the companies (see: Plessey § Break-up of the business), GPT remained a joint venture, with a 60/40 shareholding by GEC and Siemens, respectively. GEC Plessey Telecommunications was renamed to "GPT", which would continue to exist merely as a legal entity. [1] [2]

During the mid-1990s, the name GPT gradually disappeared in the UK. By October 1997 the joint venture, through a series of Siemens mergers and acquisitions in the UK, evolved into Siemens GEC Communication Systems, which in 1998 merged with Siemens Business Communication Systems to form the largest division of Siemens AG: Siemens Communications.

In August 1998, GEC acquired Siemens' 40% stake in GPT (at this point only existing as a legal entity), and merged GPT with the telecoms units of its other subsidiaries – Marconi SpA, GEC Hong Kong, and ATC South Africa – to form Marconi Communications.

Marconi (1999–2005)

In December 1999, GEC's defence arm, Marconi Electronic Systems, was sold to British Aerospace, forming BAE Systems. The remainder of GEC was renamed Marconi, and Marconi Communications became its principal subsidiary. [3] [4]

Following the announcement of the Marconi Electronic Systems demerger on 19 January 1999, GEC focused on the booming telecoms sector. It purchased two American equipment-makers to complement its existing telecommunications businesses, RELTEC Corporation (March 1999) and FORE Systems (April 1999). [5] Both acquisitions occurred during the peak of the dot-com bubble. The £2.8bn price for FORE Systems and the £1.3n spent on RELTEC took a heavy toll on Marconi following the bursting of the bubble in 2000/2001.

In the first half of 2001, some of Marconi's major competitors such as Lucent Technologies and Alcatel had issued profit warnings, citing a large drop in orders from large telecoms groups. Marconi executives meanwhile reassured investors; the Financial Times judged they were "either failing to see the warning signs, or ignoring them." [6] However, in late June and early July it became evident that group sales had suffered a massive decline and by 3 July it was clear that a profits warning was inevitable. [6] This was complicated by the fact that Marconi was to announce the sale of its medical unit to Philips for $1.1 billion. The company's shares would have to be suspended so that investors could not trade its shares without full information. At 7.26am on Wednesday 4 July the Philips transaction was announced, and 15 minutes later Marconi announced the suspension of its shares. [6] Following a contentious board meeting that evening, Marconi announced 4,000 job cuts, a 15% drop in sales forecasts, and a 50% fall in operating profit to March 2002. [6] [7] When trading resumed the following day, the share price dropped 54%. This valued the company at £2.8 billion, compared to £35.5 billion in September 2000. [6] John Mayo, the deputy chief executive, was dismissed as a result. A second profits warning in September 2001 led to the dismissal of Lord Simpson (the CEO) and Sir Roger Hurn (Chairman). [8]

In June 2001 Marconi sold its Ipsaris business to Easynet in an all-share deal worth over £300 million. Ipsaris was a network provider owning one of the largest backbones in the UK at the time, with 3,500 kilometers of optical fibre running alongside the UK canal network. The deal resulted in Marconi owning a 72% stake in Easynet. However, by March 2002 demand for space on the Easynet network had slumped and Easynet effectively mothballed the Ipsaris fibre optic network, and the value of the entire network was written down from £350 million to £15 million. [9] [10] [11]

On 19 May 2003, Marconi underwent a major restructuring into Marconi Corporation. [12] [13] In a debt-for-equity swap, the firm's creditors received 99.5% of the new company's shares, while Marconi shareholders received one Marconi Corporation share for every 559 Marconi shares. [12]

In July 2003 Marconi sold 32% of its stake in Easynet for £40.5 million and in September 2003 it sold its remaining 40% stake for £56.7 million, in an effort to pay off debt and increase the liquidity in Easynet shares. [14] [15]

The company was a major supplier of asynchronous transfer mode, gigabit Ethernet, and Internet Protocol products. In 2005, it failed to secure any part of BT's 21st Century Network (21CN) programme. That Marconi received no major 21CN contract was a surprise to commentators, and sent the company's shares tumbling. An example of analysis before BT announced the winners of contracts is Dresdner Kleinwort Wasserstein's: "[Marconi is] so advanced with its products and so entrenched with BT Group that its selection looks certain." [16]

Various bids began to be made for the business, including one by Huawei Technologies, with whom Marconi already had a joint venture. [17] The majority of Marconi Corporation's businesses, including Marconi Communications, were sold to Ericsson in 2005, [18] and the remainder was renamed Telent. [19]

Operations

In September 2000, Marconi announced the formation of global Technology Centers. [20]

The three Enterprise Technology Centers were based in San Jose, California; Vienna, Virginia; and Israel. The San Jose Technology Center, which had been responsible for management of Marconi's gigabit Ethernet solutions, broadened its research focus to include development of application-oriented platforms, connection-oriented uplinks between connection and connectionless networks, deep packet inspection solutions, and predictable quality of service. The center in Israel concentrated its research and development on AI-based network behavior and the Virginia center focused on AI-based network management.

Related Research Articles

British Aerospace plc (BAe) was a British aircraft, munitions and defence-systems manufacturer that was formed in 1977. Its head office was at Warwick House in the Farnborough Aerospace Centre in Farnborough, Hampshire. It purchased Marconi Electronic Systems, the defence electronics and naval shipbuilding subsidiary of the General Electric Company, in 1999 to form BAE Systems.

Marconi Electronic Systems (MES), or GEC-Marconi as it was until 1998, was the defence arm of General Electric Company (GEC). It was demerged from GEC and bought by British Aerospace (BAe) on 30 November 1999 to form BAE Systems. GEC then renamed itself Marconi plc.

The General Electric Company (GEC) was a major British industrial conglomerate involved in consumer and defence electronics, communications, and engineering.

The Plessey Company plc was a British electronics, defence and telecommunications company. It originated in 1917, growing and diversifying into electronics. It expanded after World War II by acquisition of companies and formed overseas companies.

George Simpson, Baron Simpson of Dunkeld is a British businessman and former Labour - and later unaffiliated - member of the House of Lords. In the late 1980s and early 1990s Simpson gained a reputation for turning around struggling companies. However, as CEO of Marconi plc he presided over one of the largest collapses in British corporate history.

<span class="mw-page-title-main">Racal</span> 1950–2000 British electronics company

Racal Electronics plc was a British electronics company that was founded in 1950.

<span class="mw-page-title-main">Mercury Communications</span> British telephone company

Mercury Communications was a national telephone company in the United Kingdom, formed in 1981 as a subsidiary of Cable & Wireless, to challenge the then-monopoly of British Telecom (BT). Although it proved only moderately successful at challenging BT's dominance, it led the way for new communication companies to attempt the same.

System X is the digital switching system installed in almost all telephone exchanges throughout the United Kingdom, from 1980 onwards.

<span class="mw-page-title-main">Ferranti</span> British electrical engineering company

Ferranti or Ferranti International PLC was a UK electrical engineering and equipment firm that operated for over a century from 1885 until it went bankrupt in 1993. The company was once a constituent of the FTSE 100 Index.

The Marconi Company was a British telecommunications and engineering company that did business under that name from 1963 to 1987. Its roots were in the Wireless Telegraph & Signal Company founded by Italian inventor Guglielmo Marconi in 1897, which underwent several changes in name after mergers and acquisitions. The company was a pioneer of wireless long distance communication and mass media broadcasting, eventually becoming one of the UK's most successful manufacturing companies. In 1999, its defence equipment manufacturing division, Marconi Electronic Systems, merged with British Aerospace (BAe) to form BAE Systems. In 2006, financial difficulties led to the collapse of the remaining company, with the bulk of the business acquired by the Swedish telecommunications company, Ericsson.

Roke, legally Roke Manor Research Ltd, is a British company based at Roke Manor near Romsey, Hampshire, which conducts research and development in the fields of communications, networks, electronic sensors, artificial intelligence, machine learning, data science, Military decision support consultancy and operational analysis, information assurance, and human science. In addition to supporting its parent Chemring, Roke undertakes contract research and development, and product development work for both public and private sector customers. Products developed from research at Roke Manor include the Hawk-Eye ball tracker, which is now used widely in sports such as tennis, football, and cricket.

Siemens Plessey was the name given to the Plessey assets acquired by Siemens in 1989. Today most of these units are part of BAE Systems while some units are now part of EADS.

GEC Plessey Telecommunications (GPT) was a British manufacturer of telecommunications equipment, notably the System X telephone exchange. The company was founded in 1988 as a joint venture between GEC and the British electronics, defence and telecommunications company Plessey. The next year, after a joint holding company of GEC and the German conglomerate Siemens acquired Plessey, GPT was converted into a 60/40 GEC/Siemens joint venture. The GPT name ceased to be used in the mid-1990s, and in 1998 the company was amalgamated into Siemens Communications.

<span class="mw-page-title-main">Telent</span> British technology company

Telent Technology Services Limited is a British radio, telecommunications, and digital infrastructure systems installation and services provision company. The name is used from 2006 for those parts of the United Kingdom and German services businesses of Marconi Corporation which had not been acquired by Ericsson. Companies with Marconi in their name can trace their ultimate origins, through mergers and takeovers, to The Marconi Company Ltd, founded by Guglielmo Marconi in 1897 as The Wireless Telegraph & Signal Company.

Siemens Communications was the communications and information business arm of German industrial conglomerate Siemens AG, until 2006. It was the largest division of Siemens, and had two business units – Mobile Networks and Fixed Networks; and Enterprise.

<span class="mw-page-title-main">Easynet</span>

Easynet was a managed services provider and delivered integrated networks, hosting and unified communications services to organisations globally. The company was later renamed Easynet Global Services, and a sister company, Easynet Connect, was founded in 2008 which focused on providing internet access connectivity to small-to-medium size companies in the UK.

Unify is a Mitel company headquartered in Munich, Germany and is present in over 100 countries. It provides software-based enterprise unified communications including voice, Web collaboration, video conferencing and contact center, networking product and services.

Marconi may refer to:

<span class="mw-page-title-main">FORE Systems</span>

FORE Systems was a computer network switching equipment company based in Pittsburgh, Pennsylvania. Founded in 1990 to supply Asynchronous Transfer Mode (ATM) cards for workstation computers, it soon branched out to become a major supplier in the ATM switch market and the extended those product lines to add Internet Protocol switching and other devices.

Sir John Allen Clark was managing director of the British Plessey Company, an electronics and telecommunications group built up by his father, Allen George Clark. His career with Plessey was dominated by a battle with Arnold Weinstock of GEC for control of the company together with English Electric from the 1960s. This culminated in the late 1980s with the takeover and break-up of Plessey.

References

  1. ↑ Backlund, Karin; Sandstrom, Madelene (August 1996). The Integration of Acquired Companies Into the Defence Industry: Experiences. DIANE. ISBN   9780788148590 . Retrieved 16 July 2012. by Karin Backlund, Madelene Sandstro
  2. ↑ "'The DECCA Legacy' A view from inside the RADAR company DECCA – BAE SYSTEMS (1949–2009)" . Retrieved 16 July 2012.
  3. ↑ Freshwater, R. "History of GEC". British Telephones. Retrieved 12 July 2012.
  4. ↑ "History of Marconi plc". Funding Universe. fundinguniverse.com. Retrieved 14 July 2012.
  5. ↑ Mortishead, Carl (26 November 1999). "GEC gains £2.4bn in value as investors celebrate growth". The Times.
  6. 1 2 3 4 5 Daniel, Caroline; Pretzlik, Charles (2 August 2001). "How the men from Marconi got their wires crossed on reality". Financial Times. London.
  7. ↑ "Stock of British telecom equipment maker slumps after warning". money.cnn.com. 5 July 2001. Retrieved 16 December 2020.
  8. ↑ Barker, Thorold; Bennett, Rosemary; Daniel, Caroline; Pretzlik, Charles (11 October 2001). "Marconi bows to Simpson pay-off". Financial Times. London.
  9. ↑ Wallen, Joanne (27 June 2001). "Marconi distances ipsaris through Easynet merger". Citywire. Retrieved 8 August 2020.
  10. ↑ McIntosh, Bill (28 June 2001). "Marconi backs Ipsaris network into Easynet". Independent. Retrieved 8 August 2020.
  11. ↑ Wray, Richard (1 March 2002). "Telecoms slump forces Easynet to axe 90 staff". The Guardian. Retrieved 8 June 2021.
  12. 1 2 "MARCONI PLC, Form 6-K, Filing Date Mar 31, 2003" (PDF). secdatabase.com. Retrieved 15 May 2018.
  13. ↑ "ADR listing of Marconi Corporation plc". SEC. Retrieved 14 July 2012.
  14. ↑ Sabbagh, Dan (5 july 2003). "Marconi sells shares in Easynet". The Times. Retrieved 8 June 2021.
  15. ↑ White, Dominic (5 September 2003). "Marconi sells rest of stake in Easynet". The Telegraph. Retrieved 8 June 2021.
  16. ↑ Le Maistre, Ray (27 April 2005). "Analyst: Marconi in Line for 21CN". Light Reading. Archived from the original on 25 September 2012. Retrieved 28 November 2006.
  17. ↑ "Marconi discussing £600m buy-out". BBC News. 7 August 2005. Retrieved 5 June 2010.
  18. ↑ Oates, John (25 October 2005). "Ericsson buys Marconi". Theregister.co.uk. Retrieved 5 June 2010.
  19. ↑ "Marconi plc (2003) information in KPMG website". fundinguniverse.com. Retrieved 14 July 2012.[ permanent dead link ]
  20. ↑ "Marconi Establishes Enterprise Technology Centers" (Press release). PR Newswire. 26 September 2000. Archived from the original on 15 October 2012. Retrieved 20 January 2009.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.