Telecoms downturn costs Marconi man the top job

It was not the wisest moment to crack a joke. In the middle of a conference call to discuss why Marconi's operating profits would halve this year, there was interference on the telephone line. "It must be an Alcatel line," quipped John Mayo, the group's chief executive-designate.

Alcatel of France is a close competitor to Marconi, Britain's leading telecommunications equipment company. But analysts were in no mood to be amused. "It was not the day for jokes. It smacked of a smug arrogance," said one analyst.

Much worse was to follow. Last Friday, at the end of a traumatic week for the company, Mr Mayo was ousted from the board.

It was not long ago that Mr Mayo was winning plaudits for his part in the transformation of GEC, the former defence and electronics conglomerate, into Marconi. But the downturn in the global telecoms market severely dented his reputation.

Mr Mayo's lack of humility became a common theme in the City as analysts and shareholders digested the severity of Marconi's profit warning. The shares have fallen by more than 90 per cent from their peak last September. Much of the hostility has been directed towards Lord Simpson, the affable former accountant who was due to become chairman this month. But Mr Mayo, who was to have succeeded Lord Simpson as chief executive, was scarcely more popular.

The City knows Mr Mayo well. He spent eight years as an investment banker at SG Warburg before making the leap to becoming an executive at Imperial Chemical Industries. Bankers have taken corporate jobs before but Mr Mayo stands out. His planned elevation, aged 45, to CEO would have made him one of the youngest to hold that post at a FTSE-100 company - assuming, that is, that Marconi remains a constituent of the index following this week's collapse in its market capitalisation.

Indeed, Mr Mayo's investment banking background was crucial over the past three years in fashioning the new Marconi. He and Lord Simpson blitzed more than $9 billion (€10.6 billion) on acquisitions to make Marconi a global competitor to companies such as Alcatel and Cisco of the US.

With the telecoms sector in turmoil, Marconi now faces the prospect of further restructuring. Mr Mayo had shown himself adept at undertaking acquisitions - and at masterminding the demerger of Zeneca, the pharmaceuticals group, from ICI. But even before his ousting, shareholders were questioning his operational experience to build a business.

Mr Mayo, balding and somewhat overweight, appears at first glance an amiable figure. But those meeting him quickly form the impression that he has more important things to be doing than exchanging small talk. When he took his job at Marconi, an executive described him as a "terrier who nips at people's heels to get them moving".

He started his career as an accountant at Arthur Andersen after graduating from Loughborough University. From there he moved to SG Warburg, where he soon gained a reputation as an abrasive but brilliant maker of corporate deals.

Those who worked for him at Warburg's talk of him with a mixture of fear, reverence and respect. Any paperwork for a deal that was not absolutely perfect would provoke a ferocious and often cutting response. But those who have worked most closely with him speak enthusiastically about his "brilliant brain" and exceptional creativity.

At Warburg's he was regarded as a team player. "There used to be a Friday night trip to El Vino's wine bar where people looked after their juniors. He always showed support for those kind of things when others sloped off to their wives in the country. He is not a snobbish kind of guy," said a former colleague.

But although people admired his intellect, they said he rubbed many up the wrong way. A former colleague mentioned his tendency towards "lecturing touched with a bit of hectoring". At ICI, Mr Mayo led an attack on the City tradition of offering first refusal on any new issue of equity to existing shareholders. It did not endear him to big institutional investors.

But there is more to his demise than the City getting its own back. "The City is saying: `We knew you very well at ICI, we knew you very well as a surehanded finance director, and we liked what we saw. You made the move and were Simpson's annointed successor and we expected better of you'," said a former adviser to Mr Mayo.

The transformation of Marconi appears, with hindsight, to have been misjudged. With telecoms carriers in the doldrums, spending on equipment has collapsed, leading to profit warnings from several groups. But until last week, Marconi's executives had been extremely reluctant to admit that their company would be affected. Even when announcing the sackings of 3,000 workers earlier this year, Mr Mayo blamed an internal reorganisation.

"Many other people in the sector got it wrong too. But Mr Mayo doesn't like to be criticised, which is a bad trait in any manager," said Stuart O'Gorman, director at Henderson Technology fund.

The mea culpa, when it came, had the air of inevitability from someone so steeped in the ways of the City.