Marconi loses £400m as share price plunges

Marconi is worth £400m less after shares lost 28% as the stock dived 15p to just 38p.

Throughout the day shares fell as analysts downgraded their forecasts following Tuesday's announcement of a further trading slump, as well as job cuts and boardroom departures.

And one analyst said the City was now worried about the group going bust.

The company, last year worth around £35bn, is now worth just £1.2bn and faces relegation from the top-flight FTSE 100 Index in next week's review.

"One wonders how much more is to follow. It is almost impossible to say how far the shares will fall," one analyst said.

"The trading position was that much worse than people were expecting. And people were also slightly worried that Marconi had not brought in an outsider to lead."

Alex Scott, fund manager at Barclays Stockbrokers said: "The analyst downgrades are part of it. The news that came out yesterday, in our view should have been made a few weeks before, it was inevitable and was priced into the stock.

"What the market is now looking at is the risk that Marconi could go bust.

"Their debt is already trading at junk bond status and their equity is increasingly looking like option value on the hope of a recovery or a takeover, and you cannot see where that is going to come from."