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Thursday, 16 May, 2002, 09:25 GMT 10:25 UK
Marconi loses 5.7bn
Marconi logo
Battered UK telecoms equipment maker Marconi has unveiled a loss of 5.7bn for the full year.

The loss is thought to be one of the biggest ever by a British company.

Marconi has also abandoned plans to publish a much-awaited business plan outlining a way to recovery.

The firm said it was putting all its efforts into trying to secure new loans to keep it afloat instead.

The firm has 2.9bn worth of net debt and is trying to thrash out a new deal with creditors.

Italian spin-off

The huge losses include a write-off of 5bn, after the firm admitted the collapse in value of the businesses it had bought.

Many firms in the telecoms sector have been forced to make similar write-offs following the bursting of the tech bubble.

But Marconi is in a much worse state than most, because it is simply not generating a lot of cash - just 365m.

That is not enough to produce an operating profit - a profit before paying off debt and similar obligations. But even worse, analysts say, it leaves Marconi without the money to invest in new products that could help it pull through the crisis.

Marconi ran into a deep financial crisis one-and-a-half years ago, when customers slashed spending on telecoms equipment. The firm does not expect its markets to pick up until March 2003.

Investors quake

The group also announced a planned initial public offering on the Milan stock exchange of its strategic communications business, part of Marconi Mobile.

While the climate for floating telecoms firms is weak, the listing may raise some much needed cash for Marconi.

Marconi's share price fell by more than 15% in the first 15 minutes of trading on the London Stock Exchange, and hovered at that level of about 7.8p.

The company's share price has collapsed by 98% in the past year - down from a high of 12.50 a share.

Investors fear that Marconi will swap its debt for equity, effectively handing the company over to its creditors and leaving shareholders with a much smaller stake in the firm.

On Thursday morning Marconi's finance director, Steve Hare, admitted that "swapping debt for equity is one of the options".

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 ON THIS STORY
The BBC's Tim Kirtley
"Rarely have company results looked so grim"
See also:

05 Sep 01 | Business
Tough task ahead for Marconi duo
22 Mar 02 | Business
Tough times for telecoms pioneer
25 Apr 02 | Business
Marconi sales fall as market weakens
18 Jan 02 | Business
Marconi 'rejected' 25bn merger idea
15 Jan 02 | Business
Marconi may cut 4,000 more jobs
21 Dec 01 | Business
Marconi hopes to hit debt target
17 Dec 01 | Business
Marconi sells optics business
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