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NO BUBBLE COMMENTS
04.01.00 :features in the Sunday Business's tips for the year 2000.
16.12.99 :+50.5, (974.5) announces a major commitment by BellSouth to deploy voice, video, and ATM based high speed data technology throughout the BellSouth network using Marconi's newly introduced ATM based DISC*S MX access platform. Marconi projects that BellSouth's planned deployment will generate over $1.0 billion in sales revenue for the company over the next three years.
14.12.99 :-15.5, (1008.5) U.S. broker JP Morgan initiates coverage of the new grouping with a 'Market Performer' rating and 965 pence fair value target - some 4 pct below its current trading price. In a hefty note, JP Morgan said it believed the recent re-rating of Marconi has been justified and the management has proven it has both strategic vision and an eye on the bottom line. The broker was also upbeat that the management can create further value, through further disposals of non-core assets and limited strategic acquisitions in telecoms. But JP Morgan questioned whether Marconi was a long-term player - saying the company has neither a full range of products nor full global distribution. In addition, it pointed out that Marconi is still one of the smaller players in the sector. "Consequently, we believe that the company does not have sufficient critical mass in its current form," the broker added. The good news, the broker said, is that Marconi could prove an attractive partner for any U.S. telecoms supplier looking for European distribution or another European player with which it has product synergies.
02.12.99 :+31.5, (931) announces that Marconi Malaysia, a joint venture managed by Marconi Communications has won a three-year, £38m contract with Telekom Mayasia to install its high-speed fault-tolerant Synchronous Digital Hierarchy technology. Marconi communications is a wholly-owned subsidiary of Marconi. The contract is a key part of Telekom Malaysia's support for the Malaysian government's Vision 2020 programme which aims to make Malaysia a world centre for new cyber lifestyle and business models. Marconi Malaysia will install and comission fibre SDH rings in western and eastern Malaysia using STM1, 4 and 16 SDH multiplexers and cross-connects and will also install a complete network management system.
30.11.99 :+19.5, (801.5) brokers highlight the attractions of the newly-refocussed group. Since it disposed of its defence arm, Marconi Electronic Systems, Marconi has spent the last six months acquiring and integrating communications companies to strengthen its position vis-a-vis its new competitors, Cisco Systems and Lucent. Over recent weeks, brokers have become increasingly hopeful that Marconi may make an early move to seek a U.S. listing in order to raise awareness of the Marconi name, which is well-known in Europe but as yet weak in the U.S. and the rest of the world. There has also been growing speculation that Marconi itself may become a target for predators - especially as it takes the U.S. telecoms equipment manufacturers head-on for the first time. Certainly, sentiment in Marconi this morning is being boosted by a 'strong buy' recommendation from Warburg Dillon Read, which has set a 900 pence 12-month target price. SG Securities was also a fan, rating the stock as an outright 'buy'.
25.11.99 :+91, (880) Marconi and Bosch Telecom enter into an agreement for the acquisition of the Public Networks Division of Robert Bosch. The purchase price is equivalent to net asset value at completion plus a premium of Euro 27m which. Based on the pro forma statement of net assets at 31st December 1998, this would have resulted in a purchase price of Euro 148m (£95m) and will be paid in cash upon completion. Following completion Bosch Public Networks will become a wholly owned subsidiary of Marconi. Bosch Public Networks, with revenues of DM1,184m (£383m) for the year ended 31 December 1998, is a major supplier of public telecom network equipment to network operators and service providers in the Central European market.
25.11.99 :+91, (880) after H1 profits 157m (1318m) - dividend 1.8p (4.2). Chairman said: "GEC took significant steps in achieving its strategic objectives and reported a strong financial performance, driven by the Communications division, in the six months ended 30 September 1999. The group's refocusing has been completed with the demerger of the defence business, and a global Communications business platform has been built with the successful acquisition and integration of Reltec Corporation, Fore Systems and RDC. From this platform, the Group is entering a new phase of rapid organic growth as Marconi plc. REVIEW OF OPERATIONS - COMMUNICATIONS: The group's communications sales, including the contributions of Reltec Corporation and Fore Systems for part of the reporting period, increased by 88% or 17% on a like-for-like basis. This growth is a reflection of increasing demand for Marconi Communications' world leading optical networks, access and broadband switching equipment portfolios and higher value-added network support services. SYSTEMS: Systems sales increased by 11% to £760m (1998/99: £683m), with a strong contribution from businesses acquired last financial year by Picker and Gilbarco. CAPITAL: Sales for the Capital division were £346m (1998/99: £373m), a decline of 7%. GEC's share of the sales of the GDA joint venture fell by 3 per cent to £126m, reflecting continued price deflation caused by the strength of sterling and the removal of recommended retail pricing. ELECTRONIC SYSTEMS: Electronic Systems sales increased by 19% to £1,849m (1998/99: £1,555m), with strong contributions from the Avionics and North America businesses, particularly Tracor which was acquired in June 1998. EXCEPTIONAL ITEMS: Exceptional items of £75m included £29m of Year 2000 expenditure and £46m of restructuring costs, of which Electronic Systems accounted for £17m and £28m respectively.... With the group's refocusing effectively completed and the global communications business now established, Marconi is strongly positioned to participate in the rapid growth of its markets to deliver like-for-like performance improvement."
12.11.99 :-37.5, (782) long-time bull CCF Charterhouse downgrades its stance on the shares from 'buy' to 'hold'. The broker cited recent share price outperformance as the reason for the downgrade. The shares have soared from 600 pence on Oct 7 to 819-1/2 pence last night.
02.11.99 :+34.5, (699.5) after a Cazanove buy recommendation.
01.11.99 :+3.5, (665) agrees to buy Nokia's synchronous digital hierarchy/dense wave division multiplexing transport equipment business. The acquisition will be made through GEC's Marconi subsidiary. Marconi will pay £46m in cash on completion, with a further £21m payable dependent on the performance of the business.
19.10.99 :+23, (612) announces that its Marconi division has received a supply contract from Telecom Italia worth £32m. Marconi will supply core transmission equipment for a new, high-bandwidth trunk network. This is the first phase of a three-year agreement which is expected to be worth up to £100m to Marconi, GEC said.
11.10.99 :+0.5, (635.5) announces that the GEC group is to be renamed Marconi following the proposed separation and merger of its international aerospace, naval shipbuilding, defence electronics and defence systems business, Marconi Electronic Systems (MES), with British Aerospace (BAe). It is expected that documents relating to the proposed separation and the merger of MES with BAe will be distributed to GEC shareholders today. Marconi also intends to seek a listing in the United States next year.
06.10.99 :+29.5, (594.5) Salomon Smith Barney confirms that it had repeated its 'buy' stance and 750 pence price target on GEC this morning and was working on a 'buy' note at the moment. Talk of a re-rating, however, was sparked by the recent performance of shares in U.S. internet equipment companies. Following the separation of its defence interests, Marconi Electronic Systems, via a merger with British Aerospace PLC, GEC has been transforming itself into a high-tech IT group, specialising in the fields of telecom networking equipment and in particular the internet. GEC's first move into this field came via the acquisition of U.S.-based group Reltec for 2.1 bln usd. Reltec, since renamed Marconi Communications North America, provides access technology for the internet, linking office and homes to the internet. The second part of its transformation came in April with the 4.5 bln usd acquisition of Fore Systems, a specialist in broadbrand internet switching technology. According to sector watchers, on a sum-of-the-parts basis, GEC is undervalued in comparison to U.S. companies working in the same field. Shares in Foundry Networks, a provider of low cost internet switching devices, for example, surged 525 pct on their first day on trading in the U.S. a few weeks ago. Foundry shares rose a further 27 usd last night to give it a market capitalisation of near 9 around bln usd.
27.09.99 :+3.5, (562) an article in the Sunday Business suggests that the company is in talks with Robert Bosch regarding buying its wireless and telecoms equipment arm for £200m.
20.09.99 :+1.5, (577) an article in the Sunday Business suggests that the company is understood to have held talks with Philips about buying its ,medical electronics operation.
02.09.99 :-19, (612) announces that its Marconi Communications unit has been selected as preferred bidder for a rail telecommunication network in the UK. The contract has been awarded by the West Coast Mainline Joint Project Team, a joint project set up by Railtrack Group and Alstom. Marconi Communications will install and maintain the network for the modernization programme that will cover the 1000km rail route between London and Glasgow.
31.08.99 :-6.5, (622) pays $15m for a 15% stake in Xcert International, with an option to take a majority shareholding. Xcert, headquartered in California, provides digital certificate software products and services for corporate enterprises and government agencies. GEC said in a statement that the acquisition of the Xcert stake is "in line with (our) stated strategy to transform ourselves into a group focused on communications and technology markets."
20.08.99 :+15, (596.5) an article in the Wall St Journal suggests that unit NBC is in exclusive talks to buy a 32% stake in Paxson Communications Corp following a change in government rules this month. It said a 32% stake would be worth more than $300m at Paxson's prevailing share price, which has surged more than 30% during the past two weeks following changes in federal rules governing the number of stations TV networks can own. The new rules make Paxson a particularly appealing acquisition target because of its stable of 73 stations around the country, the newspaper said. The day after the Federal Communications Commission changes were unveiled, Paxson confirmed it was pursuing possible deals. Neither Paxson nor NBC would comment on the current talks. One source said a deal could be announced in a matter of weeks.
19.08.99 :-18, (581.5) announces that its Marconi subsidiary has completed the acquistion of RDC Communications, an Israeli wireless networking solution company. Marconi has bought RDC for $39m.
13.08.99 :+11.5, (599.5) Investec Henderson Crosthwaite reiterates its 'buy' recommendation to clients following the group's AGM, dealers said. At the group's AGM on Aug 6, GEC said it has confidence it will achieve strong underlying sales growth and a good profit performance for the full year. Henderson Crosthwaite analyst Brian Newman said he rated the stock a 'buy' because of the group's focus on telecoms and IT, its ambitious growth targets, plans to list on the Nasdaq, its surplus assets for disposal and its revitalised management. The brokerage said it forecast pro-forma figures for current year pretax profit, excluding the six months of contributions from Marconi Electronic Systems, at 569m and an EPS of 15.5p. It forecast pro forma pretax profit for 1999/2000 at 764m and EPS at 18.9p. In 2000/2001 pretax profit is estimated at 921m and EPS at 21.8p. The British Aerospace's acquisition of Marconi Electronic Systems will be positive for both companies, it said. GEC's refocus on telecoms has provided it with the opportunity for global cross selling of a wide range of telecoms access, transmission and switching products decisively breaking out of the UK/Italian markets where it has had historic market positions. The brokerage noted that the group has a portfolio of legacy interests as a store of value to be realised, including the 25 pct of about £1bn holding in Alstom. The board has set group executives demanding performance based remuneration package targets, based on achieving growth rates of between 17 pct and 25 pct per annum. This would see the company doubling in size in three to five years, the brokerage said. Good progress has been made in re-focusing GEC to maximise shareholder value with a planned U.S. listing and most probably a change of name, it said.
06.08.99 :-3.5, (596) at AGM chairman said that .."Looking to the group's performance in the current financial year, trading conditions have continued to be buoyant in the first quarter, especially in the communications sector, which has demonstrated strong growth. The board believes that conditions in the markets we have chosen to focus on will continue to be positive for the rest of the year. In addition, the group has made substantial and encouraging progress with the integration of Reltec Corporation and Fore Systems. The combination of these factors underpins the board's confidence that the group will achieve strong underlying sales growth and a good profit performance for the full year. The cost of financing our recent acquisitions will contribute to higher interest charges in the current year, which will be offset by the profit contribution of the acquired businesses. Overall, the board expects this year's results to provide hard evidence of the soundness of our chosen strategic direction."
22.07.99 :-19.5, (619.5) announces that R E Artus has ceased to be a non-executive director of the company following his death on 17th July 1999.
14.07.99 :+26.5, (659.5) unit, Marconi Communications and Ericsson replace their existing co-operation agreement for SDH (Synchronous Digital Hierarchy) products so that Ericsson can market the full range of Marconi's SDH high-speed transmission equipment to Ericsson customers world wide. Under the terms of the arrangement, Ericsson will integrate Marconi's MSH and SMA families of SDH equipment into its total fixed and mobile network solutions.
01.07.99 :+25, (672) announces that it has agreed to buy RDC Communications, an Israel wireless networking solution company, for $39m. Completion is expected to take place in around a month.
14.06.99 :-11.5, (637.5) a CSFB note advises "buy up to 715p".
10.06.99 :+12, (641) on the results, Lex say: "It seems churlish to say GEC has done the easy bit of its transformation into an IT powerhouse. Undertaking a huge £7bn defence demerger and more than $6bn of acquisitions is hardly part-time work. And as yesterday's results showed, the underlying business is greatly improved as well. The "old" communications division pushed up like-for-like sales by 9%. The comparable rate of growth for the prior year is reckoned to be around 4%. Margins also improved from 14.7% to 15.9%. But GEC now has to exploit the opportunities from its two new acquisitions, Fore Systems and Reltec. That means cross-selling, by getting Reltec's telecom clients to use Fore switches. Fore's broadband switch is a hit with the operators but has a small share of that market, which is dominated by some fearsome competitors. GEC also has to keep innovating. Producing hybrid switches incorporating internet standards is one example. Sharing US transmission technology with GEC's existing expertise is another. "New" GEC does trade at a substantial discount to its North American peers, like Nortel, Newbridge Networks and Tellabs - not to mention the heavyweights Cisco and Lucent. That should narrow over time, but to gain the market's full confidence GEC has to show that it can nab market share without getting squashed."
10.06.99 :+12, (641) after H2 profits 1504m (879m) - dividend 8.8p total 13p (11.43). Chairman said: "R&D rose 11% to £1,036m (1997/98: £932m) The businesses within GEC Capital are profitable but compete in lower growth or smaller markets. They represent an important contributor to the Group and will be managed for value. Capital will also provide a vehicle for investing in and developing new high technology businesses. Investments, such as the group's interest in Alstom, will also be held within this division. The group eliminated its dependence on joint ventures and clarified its position in the consolidation of the global defence industry. US acquisitions in the communications sector reinforced the Group's future as a high technology company. Communications: The integration of GPT with Marconi and the Hong Kong and South African based telecommunications businesses of GEC to create Marconi Communications was successfully completed during the year. In April 1999, this division's technological and geographical footprint was expanded when GEC completed the acquisition of Reltec Corporation. The integration of Reltec into Marconi Communications is well underway with new product launches taking place in June. Systems: The Systems businesses all continued to perform well in their traditional domains of medical imaging, fuel retailing systems and data marking respectively. Each of the businesses completed the integration of recent acquisitions, strengthening their market positions. Capital: These businesses generated turnover of £772m, a decrease of 37%, of which 32% was accounted for by disposals in 1997/98. On a like-for-like basis, sales fell by 5% mainly owing to the impact of difficult economic conditions in Asia, and the effects of the removal of recommended retail pricing on the largest business in the division, General Domestic Appliances. New management has been appointed to the division to manage these businesses for value. Electronic systems: Sales in Marconi Electronic Systems increased 18% to £3,535m, largely as a result of the contribution of Tracor. The order book grew by 12% to £9,691m. The first production development orders on the Typhoon fighter aircraft and the orders acquired with Tracor were important contributions to this performance... After recent restructuring and continuing strong financial performance the group is positioned well for the future. Where appropriate, further strategic acquisitions may be made to strengthen the group's businesses in specific markets and technologies. The focus of management in the near term will be on integrating the recent acquisitions and growing 'new GEC'."
20.05.99 :+20.5, (621.5) Charterhouse Tilney reiterates trading buy ahead of the company's full year results due June 10. The stock reached a record high of 664.5p on May 4 but has, to date, fallen back.
18.05.99 :+12, (607.5) Investec Henderson reiterates its 'buy' stance ahead of June 10 results.
10.05.99 :-6, (649) an article in the Sunday Telegraph suggests that the company is poised to announce a global telecoms alliance with Japanese electronics giant NEC Corporation.
06.05.99 :-0.5, (648) talk in the market that the company is considering buying the last merchant shipyard on the Clyde.
05.05.99 :-16, (648.5) announces it is setting a group sales growth target of between 12% and 14% over the next five years. The group also said it aims to double its value in five years, although the "stretch" target is to double value within three years. GEC also intends to seek reclassification of its shares on the London Stock Exchange into the information technology sector and to obtain a US listing.
04.05.99 :+6, (664.5) after a Sunday Times buy recommendation. Also an Observer buy recommendation. The Observer reckons theat with firepower for more deals plus a listing on Nasdaq means there is still scope for GEC to outperform as it is rerated as a telecoms stock.
26.04.99 :+29.5, (608.5) on the proposed acqn of FORE, Lex say: "General Electric Company is trying to turn itself into Europe's Lucent. The acquisition of Fore Systems for $4.2bn (net of cash), on top of last month's $2.1bn purchase of Reltec, takes it to the heart of the fast-growing US telecommunications equipment market. Fore Systems brings a market-leading internet switch to complement Reltec's access products and Marconi's original transmission equipment. According to GEC, this deal "completes the physics set": it now has all the building blocks to rival Lucent and claims it is way ahead of Siemens and Alcatel. In terms of technology that may be true. But Marconi Communications' projected 1999 sales of perhaps $5½bn are still a long way behind Lucent's $35bn. One way of narrowing that gap will be to cross-sell. Fore's clever switch is a hit with internet service providers but it has yet to win over traditional telecoms carriers, where Reltec and Marconi have excellent relationships. Naturally, GEC is paying a fancy price at 6.6 times revenues; but then Fore is growing at 35% and Lucent paid nearly nine times sales for its larger rival Ascend. The speed of GEC's transformation - from static defence monolith to booming telecoms equipment provider in less than a year - is impressive. Yesterday's 5% jump in the shares shows UK investors starting to recognise this. Nevertheless, GEC's planned Nasdaq listing later this year could release a lot more value."
27.04.99 :+51.5, (660) British Aerospace and GEC announce that they have signed a definitive agreement on the principal terms of a proposed reconstruction involving the separation from GEC of Marconi Electronic Systens and its merger with British Aerospace. The transactions will involve a court sanctioned scheme of arrangement of GEC requiring the approval of a majority in number (representing not less than 75% by value) of its shareholders voting at a specially convened meeting.
26.04.99 :+29.5, (608.5) GEC and FORE Systems enter into an agreement for the acquisition of FORE Systems for total consideration of $4.5 billion (£2.8 billion) ($4.2 billion, net of cash) at an agreed price of $35 per share in cash. This represents a premium of 43% to the FORE Systems closing price on Friday 23 April 1999. The definitive merger agreement provides for an affiliate of GEC to commence a cash tender offer for all of FORE Systems' shares at $35 per share on or before 30 April 1999.
12.04.99 :-8, (582.5) announces that its telecoms equipment subsidiary, Marconi Communications, has received two military communications contracts worth £136m. The first, worth £100m is the second phase of a project from the Romanian Ministry of Defence. Marconi will supply the communications system for the army, navy and air forces. The second is from the Bulgarian Ministry of Defence for a £36m tactical communications package. Delivery is scheduled to begin in September with the first parts of the system going into service by the end of this year.
06.04.99 :+6, (564) is trying to ward off unwanted predators by investing in the data networking business, reports the weekend press, suggesting that GEC may pay £1bn for First Data Corp or £1.5bn for Fore Systems.
01.03.99 :+18, (516) is buying Reltec for total of $2.1bn (£1.3bn) including assumed net debt of $361m, at an agreed price of $29.50 per share in cash. GEC and Reltec have also entered into a definitive merger agreement under which an affiliate of GEC will start a cash tender offer for all of Reltec's shares at $29.50 per share. GEC said that Reltec designs, manufactures and sells telecommunication network products. As at 31 Dec 98, Reltec had net assets of $490m and net debt of $361m.
25.01.99 :+10.5, (557) Philips Electronics declines to comment on a newspaper report GEC is considering bidding for its medical electronics unit. "We don't comment on speculations," a Philips spokeswoman said, declining to elaborate further. A report in the Observer said GEC is mulling a bid for both Philips' and Germany's Siemens medical businesses following the sale of GEC's defence electronics arm, Marconi Electronic Systems, to British Aerospace. The deal leaves GEC with a £2.7bn cash pile.
19.01.99 :-31, (546.5) on the sale of Marconi, Lex say: "Now that Lord Simpson has married off Marconi Defence Electronics, he is talking up the attractions of the rest of GEC as a high growth, high-technology business. The growth claim is reasonable - telecommunications profits rose 21% in the first half while industrial electronics grew 14%. As for being high-tech, Lord Simpson has saved himself from jibes about tumble driers by parking GEC's domestic appliances and weighing machines in GEC Capital - where he will extract value from them until a buyer comes along. Marconi Communications has some impressive technology such as wave division multiplexing. But at Marconi Systems there is still a gap between the reality of fuel pumps and inkjet printers and the talk about e-commerce and automatic data capture. The key to narrowing this gap lies in GEC's acquisition plans. With £2.7bn of spare cash it could comfortably spend £5.5bn, and it is encouraging that some of this will go towards small punts on emerging technologies. But it may take as long to change investors' views of GEC's valuation as it will to transform its culture. Stripping out BAe's offer price puts an implied value of £9.5bn on the rest. Take off £2.7bn for the cash, and £750m for the Alstom stake, and the telecoms, systems and GEC Capital businesses are valued at £6bn. On a multiple of 23 times, Marconi Communications could be worth that alone. Whether the value in the shares is realised will depend on how GEC spends its cash."
18.01.99 :+8, (577.5) on the merger discussions, Lex say: "Britain's General Electric Company has managed to squeeze a fancy price for its Marconi defence unit. As ever, there is nothing like a touch of competition - in this case between British Aerospace and France's Thomson-CSF - to get bidders to put in their best offers. The net effect is a deal worth £7.8bn to GEC shareholders, roughly a 30 per cent premium to the £6bn Marconi was worth as a standalone entity. And, since its shareholders will own 37% of the new BAe, they will share in any upside. The financial logic for BAe is less obvious. The combination should produce pre-tax cost savings of more than £275m, worth around £2bn in present net value terms. But 37% of that value will now be gobbled up by GEC's shareholders. That said, BAe is paying most of the consideration in shares which have been buoyed by expectations it would clinch a value-enhancing deal. Taking that into account - and the fact that earnings per share will be boosted 16-18 per cent within three years - the deal looks mildly positive from a financial perspective. The real benefit to BAe will be if the Marconi acquisition strengthens its strategic position for future European deals. In the short term, that may not seem plausible: both DaimlerChrysler Aerospace (Dasa) and Thomson are likely to kick up a fuss because they have been jilted by their respective British partners. BAe runs the risk of being shut out of a reinforced Franco-German axis. But BAe could counter with a threat to turn to the US. The endgame is still to come."
19.01.99 :-32.5, (545) company and British Aerospace detail plans for BAe to buy GEC's Marconi defense and aerospace operations for about £7.7bn. GEC shareholders will get 1.17bn shares of the new BAe. That's 0.42 of a new BAe share for every GEC share held. That gives BAe shareholders 63.3% of the new aerospace business, and GEC shareholders 36.7%. GEC shareholders retain their holdings in what's left of GEC. The companies said the merger will lead to annual cost savings of about £275m within three years of the deal.
18.01.99 :+8, (577.5) GEC and British Aerospace confirm they are in advanced discussions. The announcement comes in response to speculation that the two aerospace groups are nearing a £17bn merger deal. GEC has scheduled a board meeting for Wednesday, but reports suggest an agreement could come even before this. The link-up would see Marconi demerged from GEC, with GEC shareholders offered shares in the newly formed BAe/Marconi, according to weekend press reports and today's 'Daily Telegraph'.
15.01.99 :+29, (567.5) expectation builds that GEC is close to signing a deal that will kickstart European defense industry consolidation.
06.01.99 :+17.5, (573) GEC's Marconi Communications wins a $47m order as part of a comprehensive Mid-Term Modernisation of the AWACS (Airborne Warning And Control System) aircraft operated by NATO. The order, from Boeing, is for development of a new Interrogator system for the existing fleet of NATO Boeing E3A sentry aircraft for interrogating targets and identifying friends and foes. The contract includes a production option to be exercised by Boeing by 2000.
29.12.98 :+8.5, (549.5) speculative support. Rumours suggest the company has whittled down the number of suitors to four. They are said to include British Aerospace, Thomson-CSF (France), and two US companies Lockheed Martin and Grumman Northrop.
22.12.98 :-18.5, (537.5) reports that it is to separate its civil businesses from its aerospace and defence activities. The separation may take one of several forms, the company said, but it "will enhance the ability of GEC to create value for its shareholders by leading the international defense industry consolidation." GEC did not expand further on the consolidation process going on in the industry, but did say that discussions are "proceeding well".
14.12.98 :-18, (521) confirms that it is in "intense" talks with a number of global defence companies. The group said it expects to make a decision on its future strategy soon. The statement was similar to one made earlier in the month at the time of GEC's first-half earnings results when the technology and defence electronics company said it was considering a number of options for the future. Several weekend newspapers suggested GEC has approached British Aerospace for a full or partial merger.
07.12.98 :+3, (537) an article in the Observer suggests that the company has its sights set on an imminent tie up with Lockheed Martin. This could involve a full £25bn merger.
03.12.98 :+54, (505) after H1 profits 1393m (415m) - dividend 4.2p (3.43). Company said it would decide within weeks on an important strategic step for its defence business, heightening speculation about the long-awaited consolidation of the defence industry and sparking a 12% rise in its share price. Lord Simpson, managing director, said the group "has been in intense discussions for several months with a number of major participants in the global defence industry. These discussions have progressed well and GEC expects to make a decision on its future strategic course soon." In the City, the statement was seen as evidence that Lord Simpson will shortly make his biggest move yet to stamp his imprint on the company, which he has been reshaping since 1996 after taking on the job held by Lord Weinstock for the previous 33 years. GEC's shares were the UK market's best performer, rising to 505p in active trading on the back of Lord Simpson's remarks and on interim results showing a 21% rise in underlying operating profits and a 9% rise in sales. GEC's options include an alliance with another European company such as Thomson-CSF of France, a merger with British Aerospace (BAe), and a link-up with a large US defence company. The company was careful not to give any indication of its intentions. The imminent decision, Lord Simpson said, would not necessarily lead to an immediate deal but would determine future strategy. He said recent discussions had included talks with Sir Richard Evans, BAe chairman. However, he gave no sign a link with BAe was more likely than any other option. Reports of a merger with Alcatel of France were "badly based". BAe, widely expected to agree a merger with DaimlerChrysler Aerospace (Dasa) of Germany, has consistently said it has been discussing all possible options with all other big defence companies. GEC has frequently talked with Thomson-CSF, but is concerned a French tie-up might undermine its business in the US, where it sees substantial prospects for growth following the acquisition of Tracor, a Texas electronics company. GEC has been sounding out US officials about possible reactions to a bigger deal than the $1.4bn Tracor purchase, in the light of the Pentagon's refusal to allow Lockheed Martin to buy Northrop Grumman. Lord Simpson said there was a "clear change in attitude" in Washington, which has always been extremely concerned about security, towards encouraging transatlantic corporate alliances that could involve sharing of technology. If an outright purchase did not seem likely to be allowed, another option might be a joint venture with a US company.
30.11.98 :-9.5, (495.5) Picker International, a wholly-owned subsidiary, buys the operations of the CT (Computed Tomography) division of Elscint in Israel, the US and certain other territories. The acquisition is expected to be completed in the near future. The total consideration to be paid for the CT division of Elscint is $269.5m, subject to adjustment.
23.11.98 :-3, (521) an article in the Sunday Times says that the company wants a connection with French telecommunications group Alcatel that would lead to sale of GEC's GPT telecoms equipment arm. In return would like share of Alcatel's defence interests which include 16% stake in Thomson CSF.
18.11.98 :+6, (482) France's Alcatel denies it was in talks with GEC, but a source close to the telecoms equipment supplier said GEC chief executive Lord Simpson has been in France investigating a tie-up with another French industrial company, which the source declined to name.
10.11.98 :-2, (462) appoints Sir Charles Masefield to the main board as an executive director with effect from 14th December. He will be a vice-chairman, reporting to the chief executive, and will be responsible for the group's marketing activity.
03.11.98 :+5, (482) subs., Marconi Communications, wins a $44m order from the state telecoms company, Telepar. GEC said the contract in Brazil is for SDH (synchronous digital hierarchy) transmission equipment and a network management system, providing public and private telephony, plus links to the mobile phone system, for the state of Parana. Marconi will also supply a high speed digital SDH network for long distance communications for Parana.
19.10.98 :+6, (480) after an Express on Sunday buy recommendation. The paper highlights the £15bn order book and money for acquisitions. It reckons that the shares look good value.
09.10.98 :Morgan Stanley Dean Witter say 'strong buy' (422) - about 30% of the business could be affected by the industrial cycle. The rest is driven by defence order books and secular growth in telecoms tackle. A slight cut in EPS forecasts and the brought back the broker's target price to 530p from 600p - still 27% of upside.
05.10.98 :+17.5, (417.5) benefits from falls in sterling.
17.09.98 :-39, (424) after a profits warning from Alcatel.
14.09.98 :+3, (473) reports that it will buy the computer imaging business of Israeli-based computer firm Elscint for $275m. The price for the unit, know as Elscint Computed Tomography division, is subject to adjustment. Elscint CTD, which had revenues of about $150m in 1997, will be added to GEC's Cleveland-based Picker International. The purchase will significantly increase Picker's computer imaging presence in several strategic global markets, Picker said.
04.09.98 :+8, (427) at AGM chairman said that .."Despite the continued strength of sterling and turbulence in a number of our markets around the world, the board believes the group will continue to make satisfactory progress this year. The board feels confident that the changes taking place in the company will support the continuous process of building shareholder value and the group's recent strategic actions should underpin this improvement in coming years."
06.08.98 :+9.5, (472) after Salomon Smith Barney upgraded its stance from "neutral" to "outperform". It cited the company's defensive qualities, which stemmed from the long lead times that made it relatively insulated from the economic cycle.
21.07.98 :+5, (544) unit Marconi Communications announces a deal with BT to supply equipment and services to prepare the BT network for the 'data wave' - an expected surge in data communications and internet traffic. Under a three-year sole supplier contract, Marconi Communications will supply SDH transmission equipment for BT's core network. To meet this challenge, Marconi Communications will be supplying over 400m-worth of its Series 3 SDH products to expand the BT core transmission network.
17.07.98 :Merrill Lynch say buy (536) - there is clear evidence emerging that ongoing profits are ahead of forecast. With the "reactive" phase of development now over, the focus of the company is on creating value through its subsidiary divisions., Marconi, GPT and US Industrials. Investors should expect at least two more years of marked change.
10.07.98 :+3, (548) GEC and Finmeccanica, the Italian industrial holding company, confirm that they are forming a defense electronics joint venture. The 50:50 jv between GEC-Marconi and Alenia Difesa, Finmeccanica's 100% owned subsidiary, will take care of land-based and naval radar, command and control systems, missiles, simulation and training and air traffic control. It will control businesses with around 1bn annual sales. Last year the businesses made an operating profit of 107m on net assets of 199m.
02.07.98 :+11.5, (536) with results, announces plans for a bonus issue of put warrants to buy back up to 358m of its shares and said there is an "ongoing consideration of further share repurchases to manage actively the balance sheet structure and reduce the cost of capital."
02.07.98 :+11.5, (536) after H2 profits 1055m (707m) - dividend 8p total 11.43p (13.15). Company said it was planning an innovative £358m ($598m) share buy-back and reiterated its commitment to using its £5bn war chest for acquisitions in defence electronics, telecoms and industrial electronics. Lord Simpson, managing director, announced a 7% improvement in pre-tax profits to £1.08bn in the year to March, before £25m of exceptional charges. The profits, which were struck on flat sales of £11.1bn, were at the top end of analysts' expectations despite a £50m hit from the strong pound. He said the group had undergone a fundamental culture change in the past year, leaving management focused on high-technology, high-margin and high-growth companies which could offer strong returns on investment. John Mayo, finance director, echoed his comments, saying: "Shake off your preconceptions. This is a new group, with a new shape and new aspirations". In June, GEC sold more than half its stake in the Alstom heavy engineering joint venture for £1.2bn, completed the $1.4bn takeover of Tracor, a US defence electronics group, took 100% control of GPT, its telecommunications partnership with Siemens, and finalised a radar and missiles joint venture with Alenia Difesa of Italy. The corporate shake-up is being followed by a change in its policy for distributions to shareholders. Lord Simpson said the company would now consider share repurchases each year, and unveiled a £358m bonus issue of put warrants, which he described as "a reverse rights issue". Shareholders will be able to sell or exercise the warrants, issued on the basis of one for every 50 shares held, in exchange for cash worth about 2.5p per share. The new share re-purchase plan, designed by Warburg Dillon Read, would be free of dealing costs, tax efficient and open to all shareholders, Lord Simpson said. It would also allow GEC to consider "large acquisitions which might involve debt coming on to the balance sheet," he said, adding that its £5bn of "readily available fire-power" could be increased by turning to the bond markets. Speaking of GEC's defence electronics group, Marconi, Lord Simpson said it was keen to participate in the restructuring under way in the European industry. But "it would be very, very foolish for the company to get itself into a position where it had to choose between Europe and the US". Lord Simpson said "the odds are quite long" on a deal with Thomson-CSF, the French defence group. GEC was also waiting for news on whether regulators' scrutiny of the planned takeover of Northrop Grumann by Lockheed Martin in the US would create any acquisition opportunities for Marconi. "Utopia" for GEC would be to acquire Northrop's defence electronics without its airframe activities, he said. Lex say GEC has kept its eye on the ball to produce decent results in difficult conditions. Despite the strong pound, a 7% rise in profits on flat sales shows Lord Simpson has inherited Lord Weinstock's love of stamping out fixed costs. But this is not what he will be judged on. Broader strategic questions are more important to investors now. As the tectonic plates of the defence and telecommunications industries shift, GEC cannot afford to fall between the cracks. So far, so good. From being a generally eclectic company hidebound by joint ventures, GEC has rightly focused on its core defence electronics business, now bolstered by the Tracor acquisition and Alenia alliance. Thus the company has shown it is both a good European and a player in the US too. But the next step is critical: pouncing on all or parts of Northrop might preclude a link-up with Thomson of France, which is a better fit but may never become available. Another tough decision will be who to partner in telecoms, now that GPT has lost Siemens' international sales network. Acquisitions look expensive, but alliances may limit hard-won freedom. Culling treasured parts of the low-growth industrial electronics division will also require hard-heartedness. But the current pace of change is certainly encouraging.
24.06.98 :+5.5, (483) German electronics giant Siemens announces it is selling its 40% stake in GPT to GEC, its partner in the telecoms equipment joint venture and owner of the remaining 60% stake, for 700m. And in a further unwinding of the two groups' joint ventures, Siemens is also buying the remainder of GEC Communications, of which it owns just over 50%. GEC will pay 610m cash and transfer its GEC Commincations stake to Siemens. For GEC, the deals mark further pro- gress in its strategy to move away from a joint venture culture and concentrate instead on high-growth businesses.
09.06.98 :+7, (545) GEC Alsthom wins three contracts, the first by a consortium with Peremba Construction to design, supply and construct a 3x700 MW coal fired power plant at Manjung in Perak State valued at around RM 5bn (US$1.25bn). GEC said the second contract is an order worth $80m to provide Choctaw Generation with 2x250 MW Circulating Fluidised Bed (CFB) boilers for the Red Hills power plant in Mississippi, USA. Thirdly, GEC Alsthom has won an ECU 147m (100m) order from PowerGen CHP for a 140 MW power plant in Winnington Cheshire, south-west of Manchester.
21.04.98 :+14.5, (458) is expanding its defence-related IT division with the acquisition of US company Tracor for $1.4bn (800m). The electronics and defence giant is making a cash tender offer for all Tracor shares at $40 a share. The consideration includes assumed debt. GEC said the acquisition provides a logical extension and significant compleimentary capabilities to its largest operating group, GEC-Marconi, and strongly reinforces GEC-Marconi's position as a major international defence electronics business.
21.04.98 :+14.5, (458) on acqn, Lex say: "Tracor is not the big one. But Lord Simpson could hardly have found a better fit for his first sizeable acquisition since taking the helm at General Electric Company. The $1.4bn (£830m) purchase of the Texas-based group, two-thirds traditional defence hardware and one-third whizzy battlefield software, takes GEC further into the US, further into systems integration and closer to the Pentagon. All three aspects are important. Tracor will turn GEC into the sixth largest US defence electronics company. That should allow it to keep up with the US's technological lead in defence equipment and make it a more attractive local partner - or, as GEC puts it, add "lustre to its cluster". The fastest-growing part of Tracor, itself one of the fastest-growing US defence companies, is its "digital battlefield" software, which allows generals to co-ordinate their aircraft, ships and satellites. Added to GEC-Marconi's electronic know-how, it gives the enlarged group a systems capability on a par with Lockheed and Boeing. And the price, 1.1 times revenues and 10 times last year's earnings before interest, tax and depreciation, is at the lower end of similar recent deals. Most importantly, though, GEC is signalling its serious intent to the US government, thereby laying the ground for a possible bid for Northrop Grumman, if the latter's merger with Lockheed is blocked. More likely, the Pentagon will force Lockheed to divest Northrop's radar and electronic warfare businesses - the bits GEC is most interested in. The Tracor purchase also sends a wake-up call to France and Germany: Lord Simpson will not sit on his hands while the Europeans dawdle on the need for consolidation."
09.04.98 :-9.5, (436.5) associate, GEC Alsthom, reports it is acquiring Cegelec, an energy management business with annual sales of 2.15bn, from French giant Alcatel Alsthom. The Anglo-French trains and power joint venture company, which is 50%-owned by Alcatal Alsthom, said the integration of Cegelec was expected to create a "major world player" in energy systems, transport and industrial markets. "The planned regrouping will, moreover, expand the scope of GEC Alsthom's products," a statement from GEC Alsthom said.
01.04.98 :-11, (462) confirms that it is in discussions with Finmeccanica regarding the creation of a joint venture between GEC-Marconi and Alenia Difesa. The joint venture in ground, naval and missile systems and air traffic control is approaching completion, the group said, and definitive agreements should be signed within the coming weeks.
19.03.98 :+13, (460) FT comment: "Company is set to end its link with Jonathan Aitken, the disgraced former minister, just weeks after appointing him as an adviser. The news followed concerns that the appointment may infringe US federal guidelines on business ethics after Mr Aitken was arrested on Tuesday in connection with allegations of perjury and conspiracy to pervert the course of justice. On Thursday the company said Mr Aitken, who was later released on bail, had been hired as an adviser on a "short-term project" that was "almost complete". Observers thought it unlikely he would be re-hired. GEC had recently confirmed the appointment of Mr Aitken to help it secure defence sales in the Middle East for GEC-Marconi, its defence arm. He was thought to be looking into marketing opportunities in Saudi Arabia, where he has close connections with the ruling royal family. His recent arrest concerned a failed attempt to sue the Guardian newspaper over accusations that he had accepted hospitality from members of the Saudi royal family while UK minister for defence procurement. Experts warned yesterday that hiring Mr Aitken risked infringing the US federal sentencing guidelines on business ethics. Under the 1991 guidelines, courts are required to impose harsher penalties on businesses found guilty of malpractice if they have failed to meet certain standards in the way they conduct themselves. Mr Win Swenfon, head of the business ethics service at accountants KPMG in New York, who helped draw up the guidelines while he was deputy general counsel at the US Sentencing Commission, said: "Theoretically, if the company ran into later problems, it is conceivable that the courts would look at these events."
03.03.98 :+8.5, (416.5) after GEC-Alsthom wins a 1bn Virgin Rail deal.
13.02.98 :+3, (384) sells Plessey Semiconductors to Canadian group Mitel for $225m in cash. In a news release, Mitel said Plessey currently has annual sales of about $275m. The acquisition is expected to be 'somewhat' earnings dilutive for Mitel in the short term, it noted. The company said GEC's Plessey is an international semiconductor company focused on the telecommunications, media, and personal computer markets. It said combining the semiconductor operations of Mitel and Plessey should improve Plessey's performance and result in significant economies of scale for the combined operation.
06.02.98 :+3, (395) sells Marconi Instruments to US electronic test instrumentation maker IFR Systems for 65m in cash. The sale includes UK-based Marconi Instruments and its units in France, Spain and Germany, as well as Marconi Instruments in the US. Marconi Instruments - which designs, makes and distributes electronic test and measurement systems and equipment - made pre-tax profits of 4.5m on 65.9m sales in the year to March 1997. GEC said Marconi Instruments' net assets were worth 26.8m at end-September.
02.02.98 :+15, (398) after a Sunday Times 'buy' recommendation.
27.01.98 :+6, (374) reports that Smiths Industries chairman Sir Roger Hurn will take the chair at GEC, succeeding Lord Prior in the post on Dec 1, 1998, when Hurn retires from Smiths. Prior has agreed to stay on as chairman until GEC's AGM in early Sept. Lord Simpson, GEC's managing director, said: "I am delighted that Sir Roger has agreed to join the board as chairman. His experience, track record and reputation make him the ideal choice to succeed Lord Prior and an excellent match with the senior management team at GEC."
26.01.98 :+6, (368) after a Sunday Times 'buy' recommendation.
16.01.98 :wins the contract from Brunei of three offshore patrol vessels for the Royal Brunei Armed Forces. The contract is for a ship package including propulsion, weapon systems, spares and training. The ships will be fitted with the latest technology equipment from leading international companies.
09.01.98 :WdeB say buy (405) - GEC has been structured in such a way that its full value has not been realised. Now, with new management, the strategy is to have greater control over the business. There is no reason why the company cannot do a deal outside Europe - for example in the US. A merger with British Aerospace is on the cards. This could be GEC's year.
08.01.98 :-1, (393.5) buys back for cancellation 3m shares at 395p and 1.5m at 393p. The buy-back is part of the company's 300m share buy-back programme. Company also announced the sale of a number of business units from its industrial group, which it says will raise over 100m. Mike Parton, managing director of GEC's industrial group, said the sales were in line with managing director George Simpson's strategy to refocus the group. He said he expects the full programme of disposals to be completed during the current financial year. Businesses sold include GEC's distribution and trading operations in Australia, New Zealand and Ireland and the air charter firm, Magec Aviation.
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