Citing tough market conditions and generally weaker demand, Marconi reported group sales of £367 million for the three months ending 30-June-2003. On a sequential basis, sales of network equipment and services fell by 14%. Network equipment represented 62% of the companies revenues and network services accounted for the balance of 38%.
- Sales fell in all major regions: EMEA was down 17% and North America was down 5%.
The company's cost savings program is on track to achieve its run-rate targets, but operational performance was hindered by lower sales volumes in the quarter. The outlook for the current quarter is cautious, with flat to slightly increased sales expected for the period expected.
Marconi's ten largest customers are (alphabetical order) AT&T, BellSouth, BT, Metro City Carriers, Sprint, Telecom Italia, UK government, US government, Verizon and Vodaphone. These customers accounted for 51% of sales.
Gross margin during the quarter decreased by 2 percentage points to 22.4%.
Marconi had 14,735 employees on 30-June-2003, down by about 800 employees from three months earlier. About half of the reduction came from transfers to CSC as part of Marconi's recently announced IT outsourcing agreement.
Marconi also said that for the first time in over two years, many large network operators, including BT, Telecom Italia and Vodaphone, are beginning to forecast increases in capital expenditure, but this has not translated into firm orders.
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