Marconi costs warning casts shadow over Nasdaq listing
independent.co.uk
By Saeed Shah
7 October 2000
A warning on an unexpected increase in costs overshadowed an announcement from Marconi yesterday that it is to push forward its transformation from an engineering group to a hi-tech star with a listing on Nasdaq later this month.
The company will begin a US roadshow for investors on Monday, and will list the following week. The company already has more than 40 per cent of its business in the US.
In a trading statement that accompanied the Nasdaq announcement, Marconi said that during the first half of the year, "underlying trading has been in line with the Board's expectations". But the company pointed to the pre-tax profits figure falling below analysts' forecasts for the first six months. The figures will be reported next month.
Marconi said marketing costs will be around £20m higher than expected in the period, and that it had been necessary to spend £40m above the budget on research and development. It also said that there was an additional £20m expense this year, £5m of which will be taken in the first half, to cover an expansion of Marconi's optical components business, Marconi Caswell Technologies.
In the second half, there will be a £20m charge to cover additional investment in Fibreway, its UK telecoms network business, which is to be spun off next year.
Marconi said that it expected an increase in profits in the second half to make for the dip in the first six months. The company said it would meet City expectations for profits for the whole year. Analysts have forecast full year earnings, before tax, of about £760m.
Marconi, which will not raise any new money in the Nasdaq listing, saw its shares close up 10p at 930p, after rising as high as 979p after the Nasdaq announcement.
One analyst questioned the timing of the Nasdaq move. He said: "They've missed the boat. The party's over in the US. American investors have already put money into optical technology [Marconi's new focus]. And they have lots of pure plays on Nasdaq, if they are interested in more."
The Nasdaq market raced to over 5,000 points at the height of the technology boom this spring, but the index is now down by one-third. In recent weeks, confidence has been shaken by profits warnings from Intel, Apple and Dell.
Marconi sold its defence business last year and this week announced it would sell off most of its manufacturing capacity |
