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By | Paul Kunert 28th June 2011 11:57

Cable & Wireless boss falls on sword

Third profit warning and out

Cable & Wireless head honcho Jim Marsh has quit following the telco's third profit warning in the last year.

The telco said sales in the opening 10 weeks of its fiscal 2012, which boost margin growth later in the year, were below forecasts and a skinnier sales pipeline indicated that gross margin would also fall "somewhat" short of market estimates.

The planned hike in capital expenditure – speeding up investments to underpin C&W's push for the hosting and cloud space – will result in a 5 per cent to 10 per cent shortfall in current EBITDA guidance, precipitating a halving of the intended fiscal dividend to 2.25 pence, the firm added.

As a result of this, C&W confirmed it had "accepted" the resignation of CEO Marsh while other moves in this game of corporate musical chairs will see chairman John Pluthero become chief exec and senior independent director John Barton become chairman.

"Clearly it has been a very difficult 12 months and it is now important that we take the necessary steps to ensure the future growth of our business," said Pluthero in a statement.

"I'll be looking to take a more radical approach to building on our hosting, cloud and data services businesses whilst becoming more competitive and efficient in the mature product areas. It has been easy to lose sight of what this business could be; it is my intention to reassert that future," he added.

The direction of these plans may hinge upon the potential acquisition of services-based reseller 2e2, with negotiations between the firms well underway, as revealed by El Reg.

However, a deal is by no means a dead cert as the £450m price tag slapped on 2e2 by its management and private equity stakeholders could prove an insurmountable stumbling block, with sources suggesting it is more than 11 times the 2010 EBITDA of £37.9m.

Channel onlookers are keen for a deal to be done as lasting concerns over the debt carried by 2e2 and its ultimate parent incurred by its acquisitions have caused some creditors to have sleepless nights. ®

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