BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific

BBC News World Edition
 You are in: Business  
News Front Page
Middle East
South Asia
Market Data
Talking Point
Country Profiles
In Depth
BBC Sport
BBC Weather
Tuesday, 8 October, 2002, 17:12 GMT 18:12 UK
Marconi competitors also facing battle
Telecoms equipment supplier Marconi may be looking at a difficult financial future, but are its competitors faring any better?

Today's telecom companies are struggling to survive one of the biggest slumps in business history. Their telecom carrier-customers raced to build network capacity in the late 1990s only to end up with massive over-capacity.

BBC News Online looks at three of Marconi's main competitors who are also feeling the heat.


A rapidly diminishing staff and revenues in free fall are just some of Lucent Technologies' problems.

Staffing at peak: 155,000 (June 2000)
Future staffing: 45,000 by end 2002
Share price peak: $64 (Dec 1999)
Share price low: $0.71 (Oct 2002)

The troubled firm is still facing tough product decisions and has not seen a profit in over two years.

Strategic problems haven't been Lucent's only concern.

The firm has also had some trouble at the top. After months of searching for a new chief executive, Lucent finally hired old hand Patricia Russo in January 2002.

It marked the end of one of the messiest corporate succession sagas of recent years.

Lucent had begun the search for a new chief executive after Richard McGinn was sacked from the post in October 2000, a full five months before Russo left the group to became the number two at Kodak.

That meant dragging back a former chairman, Henry Schacht, who then found himself in the hot seat as Lucent tried and failed to agree a merger with Alcatel, and continued to struggle financially.

Ms Russo had previously spent 19 years at Lucent and its one-time parent, telecoms firm AT&T, and had been away from Lucent for only 9 months before she was brought back into the fold.

The appointment got mixed reactions from the City. Some analysts expressed concern that Lucent had hired a former executive, seeing it as a missed chance to bring in new management and ideas.

Others felt a "Lucent Life" would be able to hit the ground running.

Russo has turnaround experience, but has not managed to bring the company back into profitability.

Furthermore, the ailing telecommunications equipment supplier also suffered the humiliation in September of its shares closing below the one-dollar mark, endangering the company's listing on the New York Stock Exchange.

Although Lucent is not in immediate danger of delisting from the NYSE - the stock must trade below one dollar for 30 trading days before the company is warned by the exchange - the stock has now been under a dollar every day for nearly two weeks.


Only last week French equipment maker Alcatel saw its credit rating downgraded by Standard & Poor's.

Staffing at peak: 113,000 (Dec 2000)
Future staffing: 60,000 by end 2003
Share price peak: 100 euros (Sept 2000)
Share price low: 2.03 euros (Sept 2002)

Restructuring and dire revenue warnings have been the order of the day for Alcatel as well as Lucent.

While Alcatel is under pressure, it has been provided a little breathing space from its lack of exposure to the smaller, alternative carriers which went on to collapse under huge debts.

Its sales were also less concentrated in the US, where the telecom problems hit hardest. But it has not escaped the job culls endemic in the sector.

And Alcatel's strategy has been under intense scrutiny and chief executive Serge Tchuruk under much pressure.

Last May's merger talks between Alcatel and its US rival Lucent were called off after intense negotiations failed to produce a deal.

Neither side disclosed why discussions had been terminated, although Lucent officials were believed to have stalled because they did not believe Alcatel were treating the deal as a merger of equals.

Alcatel has pushed hard to get into the China market. This summer the company finally launched Alcatel Shanghai Bell (ASB), a result of its strategy to grow its foothold in the world's fastest-growing telecoms market.

ASB wraps all Alcatel's 17 China companies into one big organisation, with the aim of challenging China's own fast-growing telecoms firms as well as to stave off old rivals Nortel and Lucent.

Will ASB bring some relief to Alcatel's fortunes? Its progress will be closely watched.

Nortel Networks

Nortel Networks former chief financial officer Frank A. Dunn has been leading the company since November 2001.

Nortel Networks
Staffing at peak: 94,500 (Dec 2000)
Future staffing: 35,000 by end 2002
Share price peak: $85 (July 2000)
Share price low: $0.45 (Oct 2002)

Suggestions that he did not have enough leadership brawn for the job seemed borne out by the fact that he had never run a business before, had not been involved with Nortel's customers in his previous role, and was no techie.

Analysts say Dunn has taken the right steps - he's slashed jobs and sold off some business areas.

But the firm is still suffering declining sales and last week Nortel were forced to prolong their 18 month restructuring process in an effort to increase efficiency.

The summer months saw the firm lowering its sale targets, shedding more staff and issuing a series of revenue warnings.

Concerns about Nortel's liquidity position were heightened as the company said it expected to enter discussions with its banks regarding its existing credit facilities.

There was concern the company might not be able to meet its credit covenants, but it insists it should break even by 2003.

See also:

08 Oct 02 | Business
08 Oct 02 | Business
29 Aug 02 | Business
29 Aug 02 | Business
Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories

© BBC ^^ Back to top

News Front Page | Africa | Americas | Asia-Pacific | Europe | Middle East |
South Asia | UK | Business | Entertainment | Science/Nature |
Technology | Health | Talking Point | Country Profiles | In Depth |