Simpson eaten by bear market: Charismatic Marconi chief replaced by nerdy Parton
By Chris Nuttall, FTMarketWatch.com
Last Update: 8:53 AM ET Sep 4, 2001
LONDON (FTMW) - Exit, pursued by a bear.
Marconi (MONI) (MONI) Chief Executive George Simpson has been forced to flee the telecoms stage in the face of a bear market of unimagined proportions. See story on Marconi shake up.
And, as with the unfortunate Antigonus in Shakespeare's The Winter's Tale, the shipwrecked and savaged lord now leaves only a small baby of a company behind, still struggling for its own survival.
Simpson took over Marconi, then known as GEC, five years ago after the parsimonious stewardship of Lord Weinstock, who left a cash pile of nearly £3 billion.
Simpson boosted it with the sell-off of GEC's defence business to British Aerospace for £7.7 billion. He sold off other assets not central to his vision of creating a new company focused on supplying the data communication needs of the information age.
Eggs in one basket
It seemed a smart move at the time. But after a spending spree on telecom assets, the cash pile has turned into a net debt of £4.4 billion today. The company said on Tuesday it was also writing down the value of those prized acquisitions by £3 - 3.5 billion.
Simpson lacked technical knowledge and barely knew how to use a computer, but he had charisma and business flair, sources close to Marconi and friendly with Simpson told FTMarketWatch.
"He was the driving force of the company, and a really nice bloke," said one. And while he had the vision, it was his lieutenant John Mayo, also now departed, who carried out the actual task of rebuilding the company.
"He put all his eggs in one basket. Weinstock warned them and warned them to stay diversified," said the source.
Simpson and Mayo had sizeable options struck at around £3 before the shares rose to above £12. But they had promised not to exercise them for two years to show their faith in the future of the company and have watched the stock sink to the 50 pence level.
Dream is dead
The dream of creating a major telecommunications force in the 21st century is now dead in the water for Simpson as well. The mantle has passed to Mike Parton, chief executive of the networks division.
Parton, 46, is, in many ways, the opposite to George Simpson in character and experience. He has quietly risen through the ranks at Marconi, joining ten years ago as a finance director after nearly 15 years in the IT and telecoms industry with companies such as ICL.
Parton headed up GPT, a joint venture with Siemens (723610) based in the Midlands that specialised in making payphones and had a world lead in the SDH (Synchronous Digital Hierarchy) broadband transmission business.
Parton was fortunate that Simpson and Mayo decided on SDH leadership becoming the foundation for their new GEC. He was made chief executive of Marconi Communications in 1998 and moved to Pittsburgh in 1999, after the acquisition of Fore Systems, to head up the core networks division.
Parton's rise
"GPT was a very small part of the original GEC group, but, through force of circumstances, Mike Parton has risen dramatically through the ranks," said a source.
"Unlike Lord Simpson, he is not a charismatic figure, and he is more of an engineer than a businessman. He does know his technical stuff, but I'm not sure why they've made him chief executive."
Departing chairman Sir Roger Hurn said on Tuesday that Parton brought "a wealth of industry experience and close relationships with Marconi's customers". He thanked George Simpson for "his leadership and energy in reshaping Marconi as a leading network communications business."
For a company needing more execution than vision now, Parton could be the right man at the right time. Marconi no longer has the cash to reinvent itself again, it has to make the best of what remains.
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