Outlook: GEC on a roll
Friday 26 November 1999
When GEC sheds its skin next Monday and begins life as an information technology stock in the FTSE-100, it will have a market value of around pounds 17bn - roughly where it was a year ago. Marconi shareholders can scarcely believe their good fortune. Not only is their company still worth what it was before it did the splits, but they have effectively acquired a 42 per cent interest in BAe, or Baesystems as it is about to become, for free. Of course, Lord Simpson and his co-pilot, GEC's finance director John Mayo, have been massively helped by the boom in telecom stocks this year. But to give credit where credit is due, Marconi has also cleverly ridden the crest of this extraordinary wave with a series of well-timed acquisitions in the US and Europe.
Shareholders can now reasonably expect more growth to come. Nothwithstanding its dizzy ascent in the past 12 months, Marconi's rating is still only a quarter of that of Lucent and a third of Nortel's - the two US telecoms stocks which it benchmarks itself against. The City always knew that Lord Simpson was an astute seller of businesses. So far he has also proved himself a good buyer, even though his knowledge of the technologies Marconi is buying into could be written on the back of a postage stamp.
Lord Weinstock, who bequeathed his mantle to Lord Simpson, may lament the fact that the empire is now unrecognisable and the cash pile spent. But he, like his successor, is laughing all the way to the bank thanks to the share price performance.
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