Marconi Communications

Marconi Communications, the former telecommunications arm of Britain's General Electric Company plc (GEC), was founded in August 1998 through the amalgamation of GEC Plessey Telecommunications (GPT) with other GEC subsidiaries: Marconi SpA, GEC Hong Kong, and ATC South Africa.

This article is about the 1998-founded subsidiary of GEC (later in 1999, a subsidiary of Marconi plc); evolved from 'GEC Plessey Telecommunications' ('GPT'). For its predecessor, the 1988 founded GPT, see GEC Plessey Telecommunications.
"Marconi plc" and "Marconi Corporation plc" redirect here. For the other businesses named "Marconi", see Marconi.

Marconi Communications
Subsidiary
Industrytelecommunications
FateAcquired
PredecessorGEC Plessey Telecommunications (GPT)
SuccessorEricsson
Telent
Founded1998
Defunct2005
OwnerGEC
(1998–1999)
Marconi plc
(1999–2003)
Marconi Corporation plc
(2003–2006)

In December 1999, it became the principal subsidiary of Marconi plc, formed by renaming the remainder of GEC when GEC's defence arm, Marconi Electronic Systems, was sold to British Aerospace to form BAE Systems.[1][2] Marconi plc was restructured to Marconi Corporation plc in May 2003.

Marconi Corporation used the cash raised by selling the defence arm to buy US telecoms companies, with the aim of becoming a major telecommunications systems provider. After losing most of its value in the subsequent dot-com bubble crash,[3] and failing to win major contracts, in 2006 Ericsson acquired a majority of Marconi Corporation. The remainder of Marconi Corporation was renamed Telent.

History

Companies with "Marconi" in their name can trace their origins through a complex history of mergers, takeovers and divisions, to the 1963-established Marconi Company Ltd, founded in 1897 as the Wireless Telegraph & Signal Company by Guglielmo Marconi. The operations of Marconi were amalgamated into GEC in 1968, when GEC acquired the parent company of Marconi, English Electric.

Background: acquisition of Plessey and GPT (1986–1997)
See also: Plessey § GEC takeover bid, Plessey § Break-up of the business, and Siemens communications § History

The evolution of Marconi Communications began in 1986, when the General Electric Company (GEC) attempted a takeover of Plessey, a British-based international electronics, defence and telecommunications company founded in 1917. The takeover bid was barred by regulatory authorities. As an amicable solution, GEC and Plessey merged their telecommunications businesses on 1 April 1988 as GEC Plessey Telecommunications (GPT). GPT was a world leader in many fields, for example synchronous digital hierarchy technology, and this brought together the two companies responsible for developing and building the System X telephone exchange, which was supposed to make selling System X simpler.

In 1989, GEC and the German conglomerate Siemens AG acquired the Plessey Company through their joint holding company, GEC Siemens plc. While most of Plessey's assets were divided between the companies (see: Plessey#Break-up of the business), GPT remained a joint venture, with a 60/40 shareholding by GEC and Siemens, respectively. GEC Plessey Telecommunications was renamed to "GPT", which would continue to exist merely as a legal entity.[4][5]

During the mid-1990s, the name GPT gradually disappeared in the UK. By October 1997 the joint venture, through a series of Siemens mergers and acquisitions in the UK, evolved into Siemens GEC Communication Systems, which in 1998 merged with Siemens Business Communication Systems to form the largest division of Siemens AG: Siemens Communications.

Marconi (1998–2005)

In August 1998, GEC acquired Siemens' 40% stake in GPT (at this point only existing as a legal entity), and merged GPT with the telecoms units of its other subsidiaries – Marconi SpA, GEC Hong Kong, and ATC South Africa – to form Marconi Communications.

In December 1999, GEC's defence arm, Marconi Electronic Systems, was sold to British Aerospace, forming BAE Systems. The remainder of GEC was renamed Marconi, and Marconi Communications became its principal subsidiary.

Marconi focused on the booming telecoms sector, and bought two American equipment-makers, RELTEC Corporation (March 1999) and FORE Systems (April 1999), to complement the businesses of Marconi Communications. Both acquisitions occurred during the peak of the dot-com bubble. The £2.8bn price for FORE Systems and the £1.3n spent on RELTEC took a heavy toll on Marconi following the bursting of the bubble in 2000/2001. In July 2001, Marconi suffered a 54% drop in its share price following suspension of trading of its shares, a profits warning and redundancies. On 19 May 2003, Marconi underwent a major restructuring into Marconi Corporation, advised by Lazard and Morgan Stanley;[6][7] Marconi shareholders received 1 Marconi Corporation share for every 559 Marconi shares. In a debt-for-equity swap, the firm's creditors received 99.5% of the new company's shares.[6]

The company was a major supplier of asynchronous transfer mode, gigabit Ethernet, and Internet Protocol products. In 2005, it failed to secure any part of BT's 21st Century Network (21CN) programme. That Marconi received no major 21CN contract was a surprise to commentators, and sent the company's shares tumbling. An example of analysis before BT announced the winners of contracts is Dresdner Kleinwort Wasserstein's: "[Marconi is] so advanced with its products and so entrenched with BT Group that its selection looks certain."[8]

Various bids began to be made for the business, including one by Huawei Technologies, with whom Marconi already had a joint venture.[9] The majority of Marconi Corporation's businesses, including Marconi Communications, were sold to Ericsson in 2005,[10] and the remainder was renamed Telent.[11]

Siemens Communications (1998–2006)

By 1997 the GPT name disappeared in UK, and the company was known by Siemens GEC Communication Systems (SGCS). The following year, SGCS merged with SBCS (Siemens Business Communication Systems) to form Siemens' biggest division, Siemens Information and Communication Networks division, later to be commonly known as Siemens Communications (Siemens COM). Siemens COM division was formed on 1 October 1998 as part of major restructuring and recombining of the Siemens information and communication activities.

In 2002, Siemens COM was divided into two major business units: one for mobile networks and fixed networks, and the other for Enterprise business units. On 1 October 2006, Siemens AG decided to divide Siemens Communications into two companies - Siemens Networks GmbH & Co. KG, and Siemens Enterprise Communications GmbH & Co. KG. The carrier business (mobile networks, fixed networks, carrier services) became Siemens Networks GmbH & Co. KG, which later merged with Nokia to form Nokia Siemens Networks LLC.

Siemens Enterprise Communications GmbH & Co. KG was demerged out of the enterprise division. Two years later, in October 2008, its operations were amalgamated into a new entity, Siemens Enterprise Communications, a joint venture formed between Siemens AG (49%) and the Gores Group (51%) to create a collaboration across wireless, fixed and enterprise networks.

Operations

In September 2000, Marconi announced the formation of global Technology Centers.[12]

The three Enterprise Technology Centers were based in San Jose, California; Vienna, Virginia; and Israel. The San Jose Technology Center, which had been responsible for management of Marconi's gigabit Ethernet solutions, broadened its research focus to include development of application-oriented platforms, connection-oriented uplinks between connection and connectionless networks, deep packet inspection solutions, and predictable quality of service. The center in Israel concentrated its research and development on AI-based network behavior and the Virginia center focused on AI-based network management.

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See also

References
  1. "History of GEC". Retrieved 12 July 2012.
  2. "Funding Universe - History of Marconi plc". fundinguniverse.com. Retrieved 14 July 2012.
  3. "The £11bn wreckers".
  4. The Integration of Acquired Companies Into the Defence Industry: Experiences. Retrieved 16 July 2012. by Karin Backlund, Madelene Sandstro
  5. "'The DECCA Legacy' A view from inside the RADAR company -DECCA - BAE SYSTEMS (1949 - 2009)". Retrieved 16 July 2012.
  6. "MARCONI PLC, Form 6-K, Filing Date Mar 31, 2003" (PDF). secdatabase.com. Retrieved 15 May 2018.
  7. "SEC - ADR listing of Marconi Corporation plc". SEC. Retrieved 14 July 2012.
  8. Le Maistre, Ray (27 April 2005). "Analyst: Marconi in Line for 21CN". Light Reading. Retrieved 28 November 2006.
  9. "Marconi discussing £600m buy-out". BBC News. 7 August 2005. Retrieved 5 June 2010.
  10. Oates, John (25 October 2005). "Ericsson buys Marconi". Theregister.co.uk. Retrieved 5 June 2010.
  11. "Marconi plc (2003) information in KPMG website". fundinguniverse.com. Retrieved 14 July 2012.
  12. "Marconi Establishes Enterprise Technology Centers" (Press release). PR Newswire. 26 September 2000. Archived from the original on 15 October 2012. Retrieved 20 January 2009.
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