20 May 05. The Department of Trade and Industry met the senior management of Marconi to seek commitments from the troubled telecommunications equipment company to keep research and development activities in the UK. The meeting between Mike Parton, Marconi chief executive, and Alan Johnson, secretary of state for trade and industry, follows Marconi’s announcement this month that it would have to cut 800 jobs after it failed to win any part of a £10bn network contract with BT. The company is to close its plant in Liverpool and is restructuring operations so that responsibility for a number of key products will move from the UK to sites in Germany, Italy and the US. About 180 of the 800 redundancies are for engineering jobs but there are concerns that a further drop in business could threaten more R&D positions. Marconi employs about 1,500 engineers in the UK. The DTI’s concerns may have been fuelled further by the fact that Marconi signed a partnership deal last Tuesday with Huawei, its Chinese rival, which could lead to some joint product development. (Source: FT)
Comment: The penny has dropped at the DTI too late! Rather than support Marconi in its bid to supply BT for its £10bn Internet network, the DTI allowed ‘market forces’ to intervene. Of course the likes of Ericsson and Huaweii and Cisco would offer ‘competitive’ prices to wrest Marconi’s huge share of the BT supply chin and they did. Now the DTI has woken up to the fact that valuable R&D and IPR will leave the UK, too late, wake up New labour!
23 May 05. JDS Uniphase has agreed to acquire privately held Acterna, a test and management products group, for $760m in cash and shares. JDS said the acquisition of Acterna, which makes devices that test the performance of high-speed networks that deliver voice, data and video services, would help JDS trim losses by targeting a larger roster of phone and cable companies. Under terms of the deal, which is expected to close in the quarter ending Sept. 30, 2005, JDS Uniphase will pay $450m in cash and $310m in shares. Acterna, which employs, 1,770 employees, had sales of more than $440m in the fiscal year that ended in March, said JDS. JDS was the most prominent of numerous high-flying optical equipment makers at the height of bull market of the late 1990s. But it was hit particularly hard when a sudden plunge in demand for networking gear pushed the entire industry into a severe contraction. The downturn forced JDS to cut more than half its employees and write down more than $50bn in goodwill, reflecting the dramatic decline in the value of companies that it acquired at inflated prices during the market run up in the late 1990s. JDS, is cutting another 1,350 jobs this year to lower costs, has started making acquisitions to jumpstart growth and end nearly six years of losses. The company reported a net loss of $39m on sales of $166.3m for the quarter ended March 31.Prime Data, an industry research firm, said the industry addressed by Acterna represents a $2.6bn market and was expected to grow at a 5-10 per cent compounded annual rate over the next five years. JDS Uniphase said the deal, which would be immediately accretive, said it expected the size of its communications addressable market to double to over $5bn. (Source: FT)
24 May 05. Detica, the IT services company specialising in national security work, reported a 33 per cent rise in annual revenues yesterday as government spending on IT continued unabated, while spending in the corporate sector also returned to growth. Detica’s key business, IT projects related to the UK’s national security, saw 37 per cent growth year on year. At the same time, Tom Black, chief executive, said he had seen a 74 per cent uplift in business from financial services companies, who are rushing to use Detica’s business intelligence software to ensure they are compliant with new strict corporate governance regulations. Spending by telecommunications customers also increased. Sales at the compa