This caught my eye:
GEC: Ugly duckling looks for fairy-tale ending
General Electric Company this week took its first step towards becoming a significant force in telecommunications equipment, with the $2.1bn (£1.31bn) purchase of Reltec, the US networking products group.
The logic of the deal, which came just six weeks after GEC sold its defence business to British Aerospace for £7bn, was applauded by investors and analysts. GEC's shares rose 11 per cent in three days.
GEC needed more exposure in the US, the world's biggest communications market. The UK group also lacked the technology to take advantage of the explosion in the data networking market. Reltec's expertise should help solve that.
However, a nagging doubt remains that GEC is still a small operator in a market which has been consolidating rapidly - as this week's deals by Alcatel and Siemens have demonstrated.
This issue is dismissed by Lord Simpson, GEC chief executive, who says: "It's not who is the biggest, but who is the fastest that counts." By being nimble and focusing on specific areas of technology, he believes GEC will be in a strong position to exploit the communications revolution.
GEC certainly won plaudits for moving so quickly after striking the BAe deal.
The sale of the defence electronics business, which is still under official scrutiny, left GEC with two main components: the systems business, comprising point-of-sale equipment, petrol pumps, inkjet machines and medical equipment, and the telecoms equipment business.
It was the merger last year of Marconi Spa and GPT that led to the creation of Marconi Communications, GEC's telecoms and systems integration business. With turnover of £1.8bn, it accounts for about 50 per cent of the post-BAe deal group. Following the Reltec purchase, this will rise to about 60 per cent.
Marconi has a strong position in equipment to facilitate the transmission process. In particular, it is a leader in equipment for the backbone of the telecoms system, known as the SDH (Synchronous Digital Hierarchy) market, supplying cross connectors, multiplexers and network controls for telecoms operators.
The purchase of Reltec also gives Marconi a position in the "access" market, which supplies the "last mile" connection between the customers and the network.
With the explosion in data traffic, the access market has become infamous for bottlenecks in telecoms systems. Reltec develops and manufactures products designed to ease these problems.
Combining Marconi and Reltec gives GEC a portfolio of products covering the transmission process from generation to home.
As important, according to Lord Simpson, is the foothold GEC gains in the US market. Reltec supplies most of the big telecoms and cable operators there, as well as other blue-chip communications groups. Introducing Marconi products into the US on the back of Reltec's relationships would be an additional benefit for GEC.
Martin Smith, an analyst with Robert Flemings, the UK stockbroker, says: "This is a very smart deal for GEC. I think it makes it big enough to succeed and places it in a position where it will be able to take advantage of the rapid changes in the US telecoms market."
Even with the rise in the shares - which are up more than 20 per cent since the defence demerger was mooted in December - he believes GEC remains undervalued as a technology stock.
"The systems business is very IT-driven, and with the telecoms side as well, we see plenty of upside in the shares from here."
Stripping out the BAe sale, GEC's cash and non-technology businesses, Mr Smith calculates that the stock is sitting on a forward multiple of just 11 times. This is a third of the valuation put on fast-growing IT and telecoms groups.
However, a point conceded by GEC is that the company has some way to go before its earnings growth matches that of the sector leaders.
Earnings growth at Marconi, for example, is about 2 per cent, although part of GEC's strategy is to raise this above 15 per cent within two years.
It blames shared ownership of GPT for the lacklustre earnings growth, but says that, with full control of management, the situation will improve rapidly.
While the company may be concentrating on developing its business organically and integrating Reltec, analysts are speculating about where it might spend some of its estimated £1bn cash-pile next.
Lord Simpson says intriguingly that data-switching and routing, particularly for the internet, are areas in which potential targets may be sought. A move into this area would put GEC right at the heart of the telecoms revolution.
Lord Simpson also sees potential to expand through acquisition in geographic markets where the group's presence needs improving, such as Germany and Italy.
"At the moment, we are still an ugly duckling in the telecoms market. People don't quite know what to make of us, but I believe in five years' time we will emerge as a beautiful swan."
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