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Wednesday, 4 July, 2001, 21:42 GMT 22:42 UK
Marconi slashes jobs
Marconi, the UK telecoms equipment maker, has said it is to cut a further 4,000 jobs worldwide as part of attempts to restore its fortunes.
The announcement came in an eagerly-awaited trading update in which the company also warned of "much tougher" market conditions and said operating profit would be down 50% this year.
"What we've seen in the last 10 weeks is a very, very significant slowing in Europe," chief executive Lord Simpson said in a conference call.
Marconi had earlier asked for trading in its shares to be suspended ahead of the statement.
That unprecedented move led to fears the company would issue its second profit warning this year and sent shares sliding across Europe.
Marconi's own shares were quoted by spread betting firm Cantor Index at a grey market price of 190-200 pence on Wednesday afternoon - 20% down on pre-suspension levels.
In its statement, Marconi said trading had been "much tougher than expected" in the three months to June and it would have to downgrade profit expectations again.
It said it expected sales for the year ended March 2002 to be 15% down on the year before while operating profit before exceptional items would be 50% lower.
It said it expected to break even in the first half of the business year at the operating profit level and put in a stronger performance in the second half, as cost cuts took effect.
On Wednesday morning, Dutch electronics giant Philips had said it was buying Marconi's medical systems business for $1.1bn.
Smaller facilities to go
Having in April announced 3,000 job cuts worldwide, Marconi said more than 4,000 people had left or agreed to leave since then.
On Wednesday, it said a further 3,000 jobs worldwide would go as well as 1,000 management positions.
There was no word on precisely where the axe would fall but Marconi did say it would concentrate operations on major sites and close "a number" of other facilities.
It said employees would hear full details of the plan over the next few days.
Several UK sites are thought to be at risk.
The additional impact of an outsourcing agreement would mean a total headcount reduction of more than 10,000, Marconi said.
Call to government
Leaders of the main unions at Marconi had on Wednesday afternoon been called for meetings with management for "clarification" over the company's moves.
This was widely interpreted as meaning more job cuts were on the way.
MSF union general secretary Roger Lyons said he was in touch with the Department of Trade & Industry to see what help the government could offer to save jobs.
Marconi employs about 50,000 workers worldwide and has several sites in the UK, including Coventry, Dorset, Essex, Liverpool, Northamptonshire, Nottinghamshire and Watford.
The MSF attacked the company earlier this year over plans to cut 1,500 jobs in the UK.
Techmark all-time low
The suspension of trade in Marconi shares had sent investors scurrying to sell off tech and telecoms stocks on Wednesday.
London's FTSE 100 index of leading shares ended the day 39 points lower at 5,601 while the Techmark 100 slipped 67 points to 1,668 - a new all-time low.
Markets in Paris and Frankfurt were also lower.
In its statement, Marconi said it had asked the London Stock Exchange for a resumption in trading from Thursday's open.
Last month, shares in Marconi plunged to a then record low of 251p because of a broker's downgrade.
But by the close of trading on Tuesday, its shares were down even further, at 245p.
Marconi shares have tumbled from a high last year of £12.50. They were briefly boosted last month by rumours that US internet networking giant Cisco Systems was considering a takeover bid.
But Cisco chief executive John Chambers was reported to have told advisers to hold off making an approach until the UK company had completed its restructuring programme.
Marconi has been hit by a severe downturn in the global market for telecoms equipment that has also taken a heavy toll on international rivals such as Nortel Networks, Alcatel and Ericsson.
In its statement, the company said it remained confident for the medium term and expected to see some signs of recovery in the first half of next year.
The cost reductions and outsourcing deal left Marconi "well-positioned to benefit from the market upturn when it occurs", the company said.
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