LONDON (Reuters) - John Mayo resigned as chief executive-designate of Britain's Marconi Plc Friday after a profit warning sent shares in the telecoms equipment maker sharply lower this week.
Marconi, one of the UK's largest and oldest companies, said George Simpson had scrapped his plan to become chairman later this month and will remain as chief executive. Current Chairman Roger Hurn also will stay on.
``Marconi is a great company going through difficult times that are not of its own making,'' Mayo said in a late-night statement.
``The entire workforce faces immediate short-term challenges and it is inevitable that sacrifices will have to be made for Marconi to enjoy the prosperity and growth available in the medium and long term,'' said Mayo, currently deputy chief executive.
The announcement marked a dramatic end to an extraordinary week on the London Stock Exchange, where the company's shares fell 54 percent Thursday after Marconi said its operating profits would halve this year. The news sent shock waves through global markets.
Marconi announced 4,000 job cuts with the profit warning, which came only seven weeks after it brushed aside worldwide gloom in the telecoms industry to forecast an upturn by the end of the year.
Some leading institutional shareholders had demanded the resignations of Simpson and Mayo, their anger compounded by the company's unprecedented decision to suspend trading in its stock Wednesday while it prepared a trading statement.
SIMPSON'S STAY NOT TEMPORARY
A spokesman said there were no plans for Simpson to resign, and that his decision to stay on should not be seen as a temporary one. Mayo should not be seen as a scapegoat, he added.
``In the changed circumstances we are committed to the task of restoring confidence in a company that we believe has a strong future,'' Simpson said in the statement.
One U.S. portfolio manager said the resignation of Mayo was not as important as its products in a market where tightened spending places an emphasis on breakthrough technology.
``Whether a CEO quits or stays in these kind of times where you've got a total implosion of capital spending is almost irrelevant,'' said Robert Gensler, portfolio manager of the T. Rowe Price Media & Telecommunications Fund.
``What's relevant is whether Marconi has good products and whether the end market is any good,'' he added. ``Right now, Marconi is not really well placed.''
Marconi is facing the same problems -- slowing spending and heavy debt loads -- plaguing other telecom equipment firms, including Canada's Nortel Networks Corp., struggling U.S. giant Lucent Technologies Inc.and France's Alcatel, Gensler said.
The continued global economic slowdown led Nortel last month to warn it would record a staggering $19.2 billion second-quarter loss and cut another 10,000 jobs. Lucent and Alcatel, which called off a merger in May, have been cutting jobs and reducing expectations as well.
MARCONI STOCK AT LOWEST POINT IN OVER A DECADE
Marconi also said Friday it was abandoning a controversial plan to lower the price of employees' options, which had earned it the wrath of shareholders even before the profit warning.
Its shares fell a further seven percent to 104-1/2 pence Friday, their lowest in more than a decade and less than a tenth of the peak reached last August after Marconi sold its defence business and changed its name from General Electric Company Plc. Its ADRs on the Nasdaq exchange in the United States fell almost 9 percent Friday to $3.05.
The fall has wiped more than four billion pounds off the value of the company, one of the world's seven largest telecoms equipment makers and a member of the FTSE 100 index of leading British stocks.
Marconi, which makes components for switching data in fibre-optic networks, blames its problems on debt problems at Europe's telecoms operators. It now sees a recovery only in
