Marconi chairman apologises over botched handling of profit warning

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Sir Roger Hurn, Marconi's chairman, yesterday moved to placate shareholders by expressing regrets over the way the group's recent profits warning was handled.

"This has been a difficult period for the company and its shareholders, which the board sincerely regrets," Sir Roger said in a letter.

Shares in the telecoms equipment maker collapsed last week after it said it would cut a further 4,000 jobs, including 1,600 in the UK, and warned that market conditions had deteriorated and operating profits for the current year would be half last year's. The alert forced the resignation of John Mayo, deputy chief executive. In yesterday's letter to shareholders, Sir Roger said the board and management were fully committed to restoring Marconi's trading performance and rebuilding confidence in its prospects.

"We remain confident in the medium-term outlook and would like to emphasise the strength of the group's financing with committed banking facilities through to March 2003 of approximately £4.5bn in addition to the group's long-term bond funding," he said. He added that he believed Marconi would be "well positioned" to benefit from the market upturn "when it occurs".

Shares in the company closed up 5 per cent at 111.75p. Sir Roger also defended the company's decision to suspend its shares from trading on the day the profit warning was released. Shareholders had been particularly upset that the statement was not issued until almost 7pm on Wednesday of last week, which meant shares in Marconi did not trade for a whole day.

"We were advised by our brokers, in order to prevent a false market in our shares, that we could not permit trading in the company's shares on the basis of an announcement of a major disposal without also, at the same time, informing the market of the company's current trading position," he said.

On the morning of the profit warning, Marconi announced it had sold its Medical Systems business to Royal Philips Electronics for $1.1bn (£781m) cash, although that figure was well beneath market expectations. The débâcle prompted two US law firms to file class actions against the telecoms equipment maker in an attempt to encourage disgruntled purchasers of the US-listed shares to recover losses.