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Regulators Want to Meet With Olivetti

Europe: At issue are half-year data and departure of chairman from Italy's troubled technology group.

September 05, 1996|From Reuters

MILAN, Italy — Italian information technology group Olivetti, whose chairman, Carlo De Benedetti, quit suddenly this week, was set for more convulsions today after the stock market watchdog called a meeting about the company.

Stock market regulator Consob called the meeting in Rome with former Olivetti Director General Renzo Francesconi, who resigned Wednesday, and the legal representative of the group, the ANSA news agency reported. No time was specified.

No one was available at Consob to confirm the report, but ANSA quoted a Consob spokesman as saying today's meeting had been called to get "explanations as to the situation which has been created following the resignation of Francesconi and his declarations about the half-year data released yesterday."

Olivetti released its half-year results for 1996 at the same time it announced De Benedetti's resignation Tuesday. It posted a $292-million pretax loss.

Francesconi was quoted as saying Olivetti's future looks very difficult, and he did not agree with some results released.

However, Francesco Caio, chief executive of the troubled group, said he was surprised at both the content and form of Francesconi's statements.

"The figures at June 30, 1996, have a strict accounting base and contain provisions which reflect in a correct and considered fashion evaluations in relation to strategic business decisions and the restructuring carried out by the company," Caio said.

Olivetti has been at the heart of a power struggle this week between De Benedetti, who built it up from an ailing typewriter producer, and Caio, who took over as managing director in July.

De Benedetti relinquished his grip suddenly late Tuesday after nearly 20 years with the company, and the share price, which had fallen 9% in two days, bounced from near-record lows to close up 3% at 52 cents on Wednesday.

Caio, speaking in a telephone conference call with equity analysts late Wednesday, said Olivetti's money-losing personal computer company, whose future has been a source of much market talk, will not break even in 1996.

The market has speculated that Olivetti would try to leave the highly competitive personal computer sector, either selling off or closing down the PC company, which made its name in the 1980s but has not turned a profit for several years.

Michael Pacitti, Italian analyst at London brokers James Capel, said, "Olivetti wanted to emphasize [that] 1996 will not be a year of recovery. It's going to reflect continuing restructuring."

Analysts said Caio stressed strategic rather than operational issues, although he noted that two of Olivetti's five companies made profits in the first half of 1996.

He said the systems and services division, which accounts for 65% of Olivetti's group sales, made an operating profit of $32 million, while office equipment maker Lexikon made a $26-million operating profit.

Olivetti's 41.3%-owned Omnitel mobile phone consortium, which was launched in December and is widely seen as its best hope for the future, had also increased the number of subscribers to its network to 500,000 by the end of August. Caio said growth had been "explosive."

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