Five-year protection on Marconi jumped 12 basis points last week to 192.5bps, as traders feared it would follow Nortel Networks and right off assets. But Leandro De Torres Zabala, analyst at Standard & Poor's, said it was assured by Marconi last week that its inventories are healthy and there will not be a right off or a profits warning. Nortel announced a right off of approximately USD12.3 billion in intangible assets in its second quarter performance outlook two weeks ago.
Howard Lacy, credit analyst and trader at Bankgesellschaft Berlin, said, "After Nortel's USD12 billion write-down of the value of its recent technology
acquisitions, there has also been speculation that Marconi will have to take a charge against its U.S. acquisitions Fore Systems and RELTEC." He added the market does not see why it would remain immune from the collapse in orders for telecommunications equipment.
Wolfgang Draack, senior v.p. for European technology companies at Moody's Investors Service in Frankfurt, said Marconi's business is focused on broadband data communications in Europe where the weakness seen in U.S. telecommunications has not materialized because the market is operating at near capacity. But Draack warns Marconi paid cash for Fore Systems and RELTEC and therefore the probability of it having to right off the goodwill element of the companies is more likely than if the company had made these acquisitions with shares.
Press officers at Marconi declined comment.
Mid-Market Levels For Five-Year Protection On Marconi
