Marconi Communications
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Marconi Communications was the former telecommunications arm of Britain's General Electric Company plc (GEC). It 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. 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 Marconi Electronic Systems Limited (MES), or GEC-Marconi as it was until 1998, was the defence arm of General Electric Company (GEC). It was split off from GEC and bought by British Aerospace (BAe) on 30 November 1999 to form BAE Systems. GEC ...
, was sold to
British Aerospace British Aerospace plc (BAe) was a British aircraft manufacturer, 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. ...
to form
BAE Systems BAE Systems plc is a British Multinational corporation, multinational Aerospace industry, aerospace, military technology, military and information security company, based in London. It is the largest manufacturer in Britain as of 2017. It is ...
. 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 The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...
crash, and failing to win major contracts, in 2006
Ericsson (), commonly known as Ericsson (), is a Swedish multinational networking and telecommunications company headquartered in Stockholm, Sweden. Ericsson has been a major contributor to the development of the telecommunications industry and is one ...
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 Guglielmo Giovanni Maria Marconi, 1st Marquess of Marconi ( ; ; 25 April 1874 – 20 July 1937) was an Italian electrical engineer, inventor, and politician known for his creation of a practical radio wave-based Wireless telegraphy, wireless tel ...
. The operations of Marconi were amalgamated into GEC in 1968, when GEC acquired the parent company of Marconi,
English Electric The English Electric Company Limited (EE) was a British industrial manufacturer formed after World War I by amalgamating five businesses which, during the war, made munitions, armaments and aeroplanes. It initially specialised in industrial el ...
.


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

The evolution of Marconi Communications began in 1986, when the
General Electric Company The General Electric Company (GEC) was a major British industrial conglomerate involved in consumer and Arms industry, defence electronics, communications, and engineering. It was originally founded in 1886 as G. Binswanger and Company as an e ...
(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 Siemens AG ( ) is a German multinational technology conglomerate. It is focused on industrial automation, building automation, rail transport and health technology. Siemens is the largest engineering company in Europe, and holds the posit ...
acquired the Plessey Company through their joint
holding company A holding company is a company whose primary business is holding a controlling interest in the Security (finance), securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own Share ...
, GEC Siemens plc. While most of Plessey's assets were divided between the companies (see: ), 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. 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 Marconi Electronic Systems Limited (MES), or GEC-Marconi as it was until 1998, was the defence arm of General Electric Company (GEC). It was split off from GEC and bought by British Aerospace (BAe) on 30 November 1999 to form BAE Systems. GEC ...
, was sold to
British Aerospace British Aerospace plc (BAe) was a British aircraft manufacturer, 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. ...
, forming
BAE Systems BAE Systems plc is a British Multinational corporation, multinational Aerospace industry, aerospace, military technology, military and information security company, based in London. It is the largest manufacturer in Britain as of 2017. It is ...
. The remainder of GEC was renamed Marconi, and Marconi Communications became its principal subsidiary. 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). Both acquisitions occurred during the peak of the
dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...
. 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 September 2000, Marconi announced the formation of Enterprise Technology Centres in San Jose, California;
Vienna Vienna ( ; ; ) is the capital city, capital, List of largest cities in Austria, most populous city, and one of Federal states of Austria, nine federal states of Austria. It is Austria's primate city, with just over two million inhabitants. ...
, Virginia; and Israel. In the first half of 2001, some of Marconi's major competitors such as
Lucent Technologies Lucent Technologies, Inc. was an American Multinational corporation, multinational telecommunications equipment company headquartered in Murray Hill, New Jersey, Murray Hill, New Jersey. It was established on September 30, 1996, through the div ...
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." 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. This was complicated by the fact that Marconi was to announce the sale of its medical unit to
Philips Koninklijke Philips N.V. (), simply branded Philips, is a Dutch multinational health technology company that was founded in Eindhoven in 1891. Since 1997, its world headquarters have been situated in Amsterdam, though the Benelux headquarter ...
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. 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. 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. 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). 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 kilometres 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, writing down its value from £350 million to £15 million. On 19 May 2003, Marconi underwent a major restructuring into Marconi Corporation. 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. 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. 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 SG Kleinwort Hambros is a private bank owned by Société Générale that offers financial services from offices throughout the United Kingdom, Channel Islands and Gibraltar. History In June 2016, Société Générale acquired Kleinwort Benson ...
's: " arconi isso advanced with its products and so entrenched with BT Group that its selection looks certain." Various bids began to be made for the business, including one by Huawei Technologies, with whom Marconi already had a joint venture. The majority of Marconi Corporation's businesses, including Marconi Communications, were sold to
Ericsson (), commonly known as Ericsson (), is a Swedish multinational networking and telecommunications company headquartered in Stockholm, Sweden. Ericsson has been a major contributor to the development of the telecommunications industry and is one ...
in 2005, and the remainder was renamed Telent.


Sponsorship

In early 2000, Marconi launched a multimillion-pound sponsorship agreement with the Benetton
Formula One Formula One (F1) is the highest class of worldwide racing for open-wheel single-seater formula Auto racing, racing cars sanctioned by the Fédération Internationale de l'Automobile (FIA). The FIA Formula One World Championship has been one ...
team. Marconi's logos were featured prominently on the B200 and B201 cars, and driver suits. The sponsorship agreement was for three years, but ended after two years due to lack of funds.


References


External links

* {{Authority control British companies established in 1998 Companies formerly listed on the London Stock Exchange Defunct computer companies of the United Kingdom Defunct computer hardware companies Defunct telecommunications companies of the United Kingdom Computer companies established in 1998 Electronics companies established in 1998 Engineering companies of the United Kingdom General Electric Company Computer companies disestablished in 2006 Electronics companies disestablished in 2006 2006 mergers and acquisitions Ericsson British companies disestablished in 2006