Tuesday, October 25, 2005

Tues - Ericcson to buy Marconi for $1.77bn

Well, thats the end of the UK's attempts at restoring the fate of the once powerful industrial conglomerate of GEC. Today it looks as though the vast majority of the remaining pieces of the beleaguered group, trading as Marconi, will be sold off to Ericcson.

Ericcson, who has proven that you can pull off remarkable transformations with messed up telco equipment suppliers, and providing a starkly different scorecard to the folk at Marconi, will now gobble the group up at a sensible price and bolster their fixed line business. To pull off their turn around, Ericcson, of late has focused on the mobile infrastructure market.

Ericcson is cherry picking at the smitten Marconi, taking all of their network equipment business, including R&D and the data neworking business in the US. Marconi will continue as an independent concern retaining its UK services business, an operation with annual sales of around $500M and a similar sized cash balance.

This ends a tough few years for Marconi when they battled desperately to turn the group around. Their final death knell came as they were excluded from a huge BT contract at the end of last year. Marconi had always enjoyed BT's considerable business. The biggest irony of all is that they lost the business to Ericcson! - proving that customers always come first.

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