Cable and Wireless Worldwide's chief executive Jim Marsh resigned today, as the corporate telecoms group issued another profit warning just 10 weeks into its financial year.
The firm, which has had a torrid year since the former Cable & Wireless split in March 2010, said core earnings would be between 5 per cent and 10 per cent below market expectations as British industry and government cut spending.
Chairman John Pluthero, who was known for turning around the original C&W, said he was taking over as chief executive after Mr Marsh understood there was a "course of action he had to take" so the business could move on.
"Clearly it has been a very difficult 12 months and it is now important that we take the necessary steps to ensure future growth," Mr Pluthero said in a call with reporters.
"There is a wider set of underlying weaknesses (in the UK economy) which is unlikely to improve, certainly to impact this year."
C&W Worldwide, which competes with BT, provides voice, data and IP based services to multinational companies and governments after it demerged from Cable & Wireless Communications, which is focused on the Caribbean.
Its shares have slumped from a peak of 98.5 pence shortly after the demerger as it has been hit by a combination of UK government spending cuts, pressure on pricing and long-term decline in its voice traffic.
Analysts said the profit warning was "disappointing" but said Mr Pluthero could make more of the group's strong balance sheet, international assets and new data services.
Analysts at Investec said although there was a negative reaction to the warning, operationally they now hoped to see the more radical approach they have been calling for with the turmoil weeding out bid interest for the undervalued assets.
Mr Pluthero said the company's strategy would not change but he had a mandate to increase investment in cloud services - data and applications stored on remote servers and accessed over the internet.
"We have to step off this carousel at some point and really start to grow the new revenue associated with cloud," he said.
Parts of the group, including its international business, could also be put on the block, he said.
C&W Worldwide rejected an approach for its international assets a week ago after a report that Asian cable network operator Pacnet had made an informal offer of about $500 million for its operations outside the UK.
"I'm open to all considerations about how we take the business forward," Mr Pluthero said.
"There's a very real sense we have to think about what we want to be in the future and what the footprint of the business is. The international business is clearly quite a strong one and there's interest in it."
Mr Pluthero also said that the poor performance of the company was not linked to the demerger.
"I absolutely disagree the demerger was the wrong thing to do," he said. "These were a set of industry trends that the business would be facing irrespective of what other bits were attached."
Reuters
