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Volume 3 Management, mergers and fraud 1987–1993
Author: John Wilson

The final volume of this detailed history of Ferranti covers the last seven years of its operating existence, starting with the 1987 merger with ISC and culminating in a humiliating demise consequent upon GEC’s 1993 decision to withdraw its bid for what by then was an unprofitable rump. Extensive attention is paid to the way in which ISC evolved under James Guerin’s stewardship, providing insights into the shady world of international covert arms dealing. While in 1987 Ferranti purchased what was regarded as a highly profitable defence electronics business, by 1989 it was apparent that ISC’s net worth was marginal, creating an accounting hole in what by then was Ferranti International from which it never recovered, in spite of highly imaginative strategies enacted by a new chief executive, Eugene Anderson. The book provides detailed insights into international mergers, corporate governance issues and defence electronics that highlight the dangers associated with competing in one of the fastest-moving industries of that era.

John Wilson

7 The ‘New Ferranti International’1 always a tendency to write history as if all paths lead to a specific destination, in the case of Ferranti International’s final three years as a trading operation it is difficult to see it as anything other than a forlorn rescue operation. Indeed, analogies such as ‘Clearing out the Augean stables’ come to mind when analysing the efforts expended to rebuild the business. Even though in June 1990 the new chief executive sustained the equine analogy by stating that ‘having cleaned out the stable, there is still a horse in

in Ferranti: A History
John Wilson

1 Ferranti by the mid-1980s Y THE MID-1980S, having effected a widely acclaimed recovery from the liquidity problems of the previous decade, Ferranti had become a significant member of the British corporate community. One might even go as far as to say that Ferranti was a microcosm of that heady decade dominated by privatisation, increasing dominance of the financial services sector and intense merger activity, alongside the introduction of new telecommunications technologies that were to have a profound impact on society over the following generation

in Ferranti: A History
John Wilson

4 From honeymoon to divorce ITH THE FERRANTI-ISC merger greeted by the business world as an astute response to a combination of market-cum-technological pressures and take-over threats, from November 1987 the two boards were then obliged to discuss in minute detail a wide range of issues. In the first place, it was crucial to decide on both the management structure and key appointments, assimilating the best talent into a hierarchy that would work effectively. Secondly, and very much linked to the first point, senior management was charged with the challenge of

in Ferranti: A History
Abstract only
John Wilson

8 Demise and epilogue to convey on paper the traumatic nature of those early 1990s years for Ferranti International, with newspaper stories aplenty announcing either mounting financial losses, possible take-overs or factory closures and redundancies, not to mention corporate missives revealing rationalisation exercises, management changes and two major reorganisations in as many years. By March 1990, Ferranti International had already slipped almost forty places in the Sunday Times Top 250 British companies, from 212th to the ‘wooden spoon’ position at the

in Ferranti: A History
John Wilson

3 A step too far? Merger with ISC of the last two chapters, attempts have been made to provide a balanced view of the relative positions of Ferranti and ISC by the mid-1980s. The dual analysis will be sustained in this chapter, especially in trying to explain why the two companies entered into a merger in September 1987, outlining how the relationship between Ferranti and ISC evolved slowly over the course of that decade, culminating in extensive rounds of detailed investigations by both executive teams and a plethora of professional advisors selected from

in Ferranti: A History
Abstract only
John Wilson

6 The rescue strategy HILE THE LAST chapter has outlined the exhaustive nature of the multiagency investigation into the fraud and other crimes perpetrated by Guerin and his closest associates, culminating in a fifteen-year jail sentence for the former ISC chief executive, we now have to analyse how those left with the horrendous task of effecting a recovery of Ferranti International coped with this enormous challenge. The fraud had created a huge hole in the company’s accounts, estimated at approximately £400 million, while the acquisition of bank debt

in Ferranti: A History
John Wilson

5 Investigations and court cases suspend trading in Ferranti International shares at the AGM on 12 September 1989 was the kind of news story that would have extensive ramifications both within and outside the firm as a wide range of stakeholders and interested parties absorbed its implications. For the 26,000 employees, of course, nothing could have been worse than an announcement that seemed to place in jeopardy a large proportion of those jobs, while for investors who had sunk significant sums into the equity – including several thousand employees who thought

in Ferranti: A History
Abstract only
John Wilson

2 The rise of ISC HEN ON 21 September 1987 the Ferranti board formally announced the merger with International Signals & Control plc (hereafter, ISC), few contemporary commentators were publicly willing to make anything other than positive comments about the prospects for this amalgamation. Although coincidentally – some would say, prophetically – shareholders approved the merger on what has passed into financial history as ‘Black Monday’, on 19 October 1987, when share prices collapsed precipitously across the industrialised world, it is difficult to detect

in Ferranti: A History
The gothic potential of technology
Lisa Mullen

the possibility of cybernetic self-reflection. He and his friends then moved on to the exhibition’s most high-tech centrepiece, a computer named Nimrod supplied by the electrical engineering firm Ferranti, which was programmed to play the numbers game Nim. This basic game can be won in most cases by using a simple but somewhat counterintuitive strategy, and an algorithm enabled the computer to beat most members of the public who took it on. As Bronowski’s guide to the Science Exhibition put it, ‘Although it will not always win, the machine cannot make a mistake!’ 95

in Mid-century gothic