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Carlo de Benedetti quits Olivetti

Carlo de Benedetti last night resigned unexpectedly as the long-standing chairman of Olivetti, after a two-month power struggle with newly appointed managing director Francesco Caio. Mr de Benedetti is being replaced as chairman by Antonio Tesone.

Mr de Benedetti has headed Olivetti since 1978 when his Compagnie Industriale Riunite holding company bought a controlling stake in what was then a struggling typewriter company. He steered Olivetti into the computer, then the multi-media fields.

Pressure has been mounting in the last few months, for senior management changes, particularly from investors who have suffered a 44 per cent fall in the price of their shares this year. Olivetti's shares yesterday dropped another 39 lira to 726 lira.

In a recent statement, former Olivetti board member Giorgio Panattoni summed up Mr Caio's position by calling for an end to "financial alchemy and false information which has given a distorted impression of the company and its market position over the past few years".

Mr de Benedetti's resignation follows huge losses at the group. The company has lost 4.34 trillion lire (pounds 1.8bn) over the past five years, including a 440.2bn lire pre-tax loss in the first six months of this year that was announced yesterday.

"De Benedetti has made a lot of promises to investors about what he would do with the company. Now it looks like it's all gone wrong,'' said Allan Raphael, a fund manager at Arnhold & Bleichroeder International in New York.

In the first six months of the year, Olivetti said its revenues fell to 4.22 trillion lire from 4.74 trillion lire. The company reported an operating loss of 80bn lire.

As part of the resignation, Olivetti is creating a four-person advisory board consisting of Mr Tesone, Mr Caio, Franco Girard, a director, and Rodolfo de Benedetti, son of Mr de Benedetti and chief executive of Industriale Riunite.

The company has raised vast amounts of money in recent months to try to solve its problems, and fund expansion in media. In December, the company raised 2.26 trillion lire of fresh capital to plug losses in its chief loss-maker, its personal computer division, and to finance a move into telecommunications.