Is heading Argentina's way: "Marconi cut, restructuring needed." But the cuts and the restructuring never comes. So it slowly dives into oblivion.
The British financial establishment cannot stomach a total collapse of MONI. Too much for their egoes. So it stucks its head into the sand and prod on. Juts post-poning the inevitable painful collapse.
Marconi cut, restructuring needed
ABN says Marconi's competitive position is 'weak'
By Friedel Rother, FTMarketWatch.com 12:16:00 PM GMT Dec 19, 2001
LONDON (FTMW) - ABN Amro told investors to get out of Marconi on Wednesday and said the troubled telecoms equipment maker would almost certainly have to launch a new round of restructuring.
"We do not see how Marconi can trade its way out of its present predicament. Some form of financial restructuring appears inevitable if Marconi is to be restored to a robust financial and commercial position. It is hard not to conclude that this should happen sooner rather than later," ABN Amro wrote.
ABN Amro now rates Marconi [UK:MONI, News, Chart, Research] a "sell" versus its earlier "hold" rating and recommends that investors look to France's Alcatel [FR:013000, News, Chart, Research] or Spirent [UK:SPT, News, Chart, Research] as alternatives.
It also set a target price of 23p for the troubled telecom equipment provider, 38 per cent below its current trading price of 37p. In the past year, Marconi shares have hit a high of 810p and a low of 12.25p.
Can Marconi keep pace?
The Dutch bank then went on to describe Marconi's [US:MONI, News, Chart, Research] competitive position as weak and in danger of getting worse.
"The optical transmission business is a good one, but it will need significant investment in R&D to keep pace with the competition. Marconi may be unable to fund that investment," said ABN.
As for Marconi's £3.5bn debt load, ABN Amro said it should be halved.
Marconi chief executive, Mike Parton, has said he hopes to cut that debt to between £2.7bn and £3.2bn by March.
However, the Dutch bank added that it didn't expect to see Marconi reducing its net debt for some time.
The report from ABN comes one day after Marconi said it was selling its optical network components business to rival Bookham Technology [UK:BHM, News, Chart, Research] for a 9.99 per cent stake in Bookham. See more on Marconi, Bookham deal
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Other analysts who cover Marconi seem to agree that the group is facing considerable difficulties.
French brokerage Oddo Pinatton recently said the group's operating conditions were "very fragile" and it was therefore adopting "very cautious sales estimates beyond 2003."
SG Securities, meanwhile, recently said that Marconi's debt was a "key concern" and placed a 15p price target on the shares.
By contrast, Teather & Greenwood is one of the few with a more optimistic outlook. It rates Marconi a "strong buy" and says the shares are worth 65p. |
