STORM clouds gathered over Cable & Wireless Worldwide yesterday as it faced its bleakest day in a dire year.
Shares in the beleaguered telecoms giant slumped as much as 16 per cent on yet another profit warning – its third since its demerger from Cable & Wireless Group.
The impromptu announcement was accompanied by a letter of resignation from its embattled chief executive Jim Marsh, described to City A.M. by one industry watcher as leader of “the most loathed management team in the FTSE”.
Chairman John Pluthero has taken over the role, saying he will take a “more radical approach” to the restructuring of the business. He made the firm’s strongest indication yet that it will bid for cloud services provider 2e2, saying he will focus on “building our hosting, cloud and data services business”.
It is also expected Pluthero will forge ahead with plans to offload the firm’s international business, which provides around 25 per cent of the firm’s revenue. Analysts say the unit could be worth in the region of £650m. Independent director John Barton has taken over as chairman.
Investors, who have seen the stock fall from a high of almost 150p in March last year to a low of 43p, were also hit with the news C&WW will slash its dividend by half to 2.25p for the next financial year.
It now faces an uphill struggle to turn the firm around, with analysts saying it could be a bid target, with speculation persisting that AT&T is interested. A statement from C&WW said: “Our gross margin outturn is now expected to be somewhat below current market expectations,” blaming “a lower than projected sales pipeline”.
It said profits for the first ten weeks of the financial year are in line with expectations.