ABSTRACT
On 2 December 2000, The Economist ran a story^ entitled 'Reinventing Marconi' which opened as follows: 'In three years, George Simpson has turned Britain's stodgiest industrial company into a high-tech communic ations business'. On 6 July 2001, the Financial Times devoted a full-page spread to Marconi which contained a story entitled 'Heroic duo's reputation hit below waterline'.^ Evidently, the fall had been rather swifter than the rise, but a more accurate picture can be obtained by reference to Figure 12.1, which plots the share price over the past ten years or so. What this reveals is that Marconi's share price was extremely stable from the beginning of 1993 until the end of 1997, around the 250p mark. During 1998 and 1999 it roughly doubled, before taking off like a rocket at the end of 1999 to peak at 1,1 OOp in January 2000. A sharp fall to 700p in April was followed by a further surge to roughly l,250p in September At the time of The Economist article the share price was well below its peak - albeit moving sharply upwards - and it may seem on the face of it, therefore, a rather odd time to be lauding the company's progress; but as most of the other case studies show, TMT stock prices in general were heading downwards at the time. Nor was there anything exceptional about the ongoing decline, but the drop in early July 2001 was both very sharp, accompanied by an extraordinary trading volume of over 500 million shares and, as subsequent history has shown, indicative of a company in near-terminal condition.
