Marconi’s Deputy CEO Resigns Amid Stock Plunge

John Mayo resigned as chief executive-designate of Marconi on Friday after a profit warning that sent shares in the telecom equipment maker sharply lower this week.

Marconi, one of Britain’s largest and oldest companies, said George Simpson had scrapped his plan to become chairman this month and will remain as chief executive. Current Chairman Roger Hurn also will stay on.

“Marconi is a great company going through difficult times that are not of its own making,” Mayo said.

“The entire work force faces immediate short-term challenges, and it is inevitable that sacrifices will have to be made for Marconi to enjoy the prosperity and growth available in the medium and long term,” said Mayo, currently deputy chief executive.

The announcement marked a dramatic end to an extraordinary week on the London Stock Exchange, where the company’s shares fell 54% on Thursday after Marconi said its operating profit could be halved this year. The news sent shock waves through global markets.

Marconi announced 4,000 job cuts with the profit warning, which came only seven weeks after it brushed aside worldwide gloom in the telecom industry to forecast an upturn by the end of the year.

Some leading institutional shareholders had demanded the resignations of Simpson and Mayo, their anger compounded by the company’s unprecedented decision to suspend trading in its stock Wednesday while it prepared a trading statement.

A spokesman said Simpson has no plans to resign and that his decision to stay on should not be seen as a temporary one. Mayo should not be seen as a scapegoat, he said.

Marconi, which makes components for switching data in fiber-optic networks, blames its difficulties on debt problems at Europe’s telecom operators. It now sees a recovery only in the first half of 2002.

But investors suggested Marconi was unwise to make such a prediction in the current climate. “I think that is what has really upset people,” said a fund manager for one of its five largest institutional shareholders.

Marconi’s shares fell a further 7% in London, their lowest in more than a decade and less than a tenth of the peak reached in August after Marconi sold its defense business and changed its name from General Electric Co.

Its U.S. shares fell 30 cents to $3.05 on Nasdaq.