Thursday November 25 6:22 AM ET
GEC Bullish About Marconi's Future
By Dan Lalor
LONDON (Reuters) - British General Electric Co Plc, to be reborn next week in the information technology sector as Marconi, on Thursday delivered an upbeat assessment of the revamped group's prospects and recent performance.
``Marconi won't just hit the ground running, it will take off as Europe's brightest technology company,' chief executive George Simpson told reporters.
``We have done the rationalizing. We have built the global platform. We are now on with the next phase, driving for growth,' he said, adding that growth would be largely organic. 'The emphasis is on harvesting value from what we have created.'
But not entirely -- alongside solid first-half results, GEC announced it was paying 95 million pounds ($153 million) for Bosch's public networks unit, a German telecoms operation with revenues of 383 million pounds in 1998.
``We have (now) spent $8 billion in the past 15 months to put together a very strong technical and geographic business in telecoms and we now need to really drive that business.'
GEC's results showed an operating profit at its continuing Marconi business rose 10 percent on a like-for-like basis to 299 million pounds ($483 million) before exceptionals and goodwill.
Turnover, again excluding the defense arm, rose 40 percent to 2.5 billion pounds in the six months to September, an eight percent like-for-like rise.
Simpson said the highlight was an 88 percent increase in reported communications revenue, which meant it achieved its target of like-for-like communications growth in the mid-teens.
``Today's numbers are a very clear testament to our success in executing our strategy,' Simpson said.
The market clearly thought so. At 1030 GMT GEC's share price was 8.4 percent higher at 855 pence, a fresh 1999 high. New Marconi shareholders will receive a 1.8 pence interim dividend, against 4.2 pence previously for the 'old' GEC.
Buying And Selling
GEC's sale of its defense unit, Marconi Electronic Systems, to British Aerospace Plc was due to complete next Monday. Then, GEC will reclaim the historic Marconi name, while BAe was also expected to rename itself, as Baesystems.
Simpson said MES's first-half performance was ``in line with our and BAe's expectations as they completed a number of more difficult contracts...and goes into BAe in excellent shape.'
On GEC's acquisitions, Simpson said the Bosch buy announced earlier was key in that it gave access to the German telecoms market which is in the early stages of deregulation.
``We believe that it is going to grow very, very fast. It is very important for us with global aspirations to get access to Europe's largest telecoms market.'
GEC's previous major acquisitions -- Reltec, Fore Systems and RDC -- either had or were being smoothly integrated, Simpson said. ``Those transactions provided technology and a geographic reach...and gave us access to the very important U.S. markets.
Marconi -- Brief Chronology
Guglielmo Marconi arrived in London from Bologna, Italy in 1896 to patent his ``black box' through which he had communicated via wireless transmission. The following year, he set up a company and sent the first wireless message -- ``Let it be so' -- in Morse code across the Bristol channel in western England.
Communication between Cornwall in southwest England and Newfoundland in eastern Canada was established in 1901, a year after GEC went public.
Marconi's company later became part of English Electric, which merged into GEC in 1986, creating what was then Britain's biggest electronics and appliance company.
The new Marconi will be reclassified on the London Stock Exchange as an information technology stock. It was expected to list on the technology-laden U.S. Nasdaq market next year.
Simpson said Marconi would be interested in broadening its investor base and ``certainly the U.S. is the place we would want to do that. It is something that is very high on our agenda.'
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