Marconi

» see marconi.com as it lived, on the wayback machine

~ the goodbye ~

Guglielmo Marconi registered the Wireless Telegraph and Signal Company on 20 July 1897, at twenty three years old, to sell a thing nobody had a use for yet. It put a signal across the Atlantic in 1901 and opened a commercial transatlantic service in 1907. Over the ninety years after that the name went into the diode valve and into radar, then into most of the machinery of British broadcasting. By the 1990s it sat inside GEC, one of the largest industrial companies in the country.

Nobody ever bought a Marconi. It sold transmission equipment to telephone operators and broadcasters, so its products reached the public as dial tone and as a television picture, and its death reached the public as a share price. That price peaked at 1250 pence in September 2000. Two years later the shareholders who had held on were left with half of one percent of the company.

~ the chronicle ~

~ the cash pile ~

Arnold Weinstock ran GEC for thirty three years and left it with a reputation for hoarding money. When he retired in 1996 the balance sheet held something in the region of £2.6 billion in cash, which the City had spent a decade complaining about. George Simpson arrived from Rover with a plan for it.

The plan was to become an American-style telecoms equipment company, and it was executed at the very top of the market. The defense arm went to British Aerospace in 1999, creating BAE Systems and converting the last conservative part of the business into more cash. GEC then renamed itself Marconi and bought Reltec for $2.1 billion and FORE Systems for $4.5 billion, both American, both purchased in 1999 to take on Cisco and Nortel.

The FORE goodwill was written off later, all $4.5 billion of it. By then the cash was gone and the market it had been spent on had stopped buying.

~ the phone call from BT ~

On 5 July 2001 Marconi suspended trading in its own shares, warned that profits would halve on sales down 15 percent, and cut 4,000 jobs on top of the 3,000 it had already cut that April. When trading reopened the price fell by more than half in a day and took £3 billion of value with it. Lord Simpson kept his job that week and lost it before the year was out.

A debt-for-equity swap in 2003 handed the company to its creditors. What survived was a smaller equipment maker with one obvious lifeline in front of it: BT's Twenty First Century Network, a £10 billion rebuild of the British telephone system. Marconi had supplied BT for decades. On 28 April 2005 BT published its preferred supplier list without Marconi on it, and the shares fell more than 40 percent that day.

The reporting afterward was consistent about why. The equipment had tested well. The price had not. BT ran a global tender and the Chinese and American bidders came in under a company that could not go lower and still exist.

~ what came after ~

Ericsson offered for the name and most of the assets in October 2005 and completed the purchase on 23 January 2006, paying about £1.2 billion for a business that had spent £4.5 billion on a single American acquisition six years earlier. The 2,000 staff left over, doing telecom infrastructure work in Britain and Ireland, were renamed Telent.

Ericsson still holds the trademark and puts it on nothing a customer would recognize. A hundred and nine years of British wireless went into a Swedish balance sheet as one line item.

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