Capture The Moment: FirstKnow.It

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Marconi is a provider of capital equipment to the telecoms sector whose travails in recent months are exemplified by the difficulties of BT: debt, uncertainty over the value and risks of G3 mobile licences, competition, deregulation and the internet. The EuroTop index of teleco's is down drastically since March 2000 when it peaked amid speculative frenzy. Their difficulties mean Teleco's will cut capital spending and Marconi like Ericsson, Motorola, Lucent and Alcatel is directly in the firing line.

Marconi's exposed position is reflected in its share price - down well over 90%. The impact of the share price decline on Marconi's credit rating produced by FirstKnow.It can be seen in the following graph.

Marconi’s high asset variability (at five times the average of the property sector) impairs its FirstKnow.It credit rating. Even with a share price seven times its current level, Marconi was only rated a BBB- in February and the fall to mid March saw it dip to a CC, remaining in the C band until mid June when it became classed as a D. The share suspension and further profit downgrade did serious damage to the share price and credit rating, with the company now rated a very poor D- and still deteriorating. The move from the B category to C category in March was a key indicator to credit managers of the deteriorating outlook for the company.