Marconi is to cut a number of UK jobs

The telecoms equipment company made the warning as it released its annual results for the year ending 31 March, which saw it cut its loses by 62%.

Marconi lost out last month on being a part of BT's new �10bn UK network.

In addition to the �50m drop in sales, 800 jobs are to go as a result. Marconi is also spending �55m on restructuring.

Losing the BT contract was a particularly tough blow for Marconi, as it generates 25% of its work in the UK from BT.

Marconi also warned that its margins were likely to come under pressure this year as it had to cope with a competitive market and a changing business mix.

Rescue effort

For the year ending 31 March, the telecoms equipment company made an operating loss from continuing operations of �95m ($174m), down from �249m for the year before.

For the three months to 31 March, Marconi made a fourth quarter operating loss from continuing operations of �15m, down from �32m a year earlier.

The actions we had already taken to rebuild the business over the last three years will enable us to make further progress this year, despite BT's decision Marconi boss Mike Parton See Marconi's share price

Fourth quarter sales were up from �329m to �346m, again compared with the same period a year before.

Marconi, which formed itself from the once-mighty UK industrial giant GEC, was on the verge of collapse in 2000, after it was hit by the-then sharp downturn in the telecoms and technology markets.

Since then it has continued efforts to turn around its fortunes, and two years ago it secured a life-saving financial rescue package.

It has gone on to made steady progress, wiping out its �669.5m debt mountain ahead of schedule.

'Further progress'

Marconi recently clinched a major deal with Huawei Technologies, giving it an inroad into China and the rest of Asia.

Marconi will also continue to supply equipment and services to BT under existing contracts, including a �90m-a-year deal that runs until 2008.

Mike Parton, chief executive of Marconi said the last financial year showed "further good progress" for the company.

"Whilst we are extremely disappointed not to have been selected as a preferred supplier for BT's... programme, the actions we had already taken to rebuild the business over the last three years will enable us to make further progress this year, despite BT's decision," he said.