Olivetti's shares fell sharply at the end of last week on market rumours that the company would issue a rights issue to dig itself out of financial problems. However, the Italian company, whose second quarter figures are likely to be disastrous, denied it was taking this course.
The company's shares fell by 6.62 per cent at the end of last week following rumours of the proposed increase in capital through a rights issue. Olivetti categorically denies that it is planning a rights issue but claims that it has implemented a radical restructuring of its holding company, Olivetti SpA, in an effort to cut costs and improve internal communications.
"The new roles and functions of Olivetti SpA are the result of an intensive organisational review over the past few months,? claimed Roberto Colaninno, chief executive officer of Olivetti. ?Even as regards operating control of business performance, we are now better equipped to face the complex period of growth, recovery and change that lies ahead."
Analysts were more tentative about the reorganisation. Nimrod Schwartzman, analyst at James Capel in London, said: ?I?m very cautious on Olivetti. The new management team has not done as much as I was expecting to reassure the market the last six months.?
The holding company will now take responsibility for the global strategy and alliances of its four operating units - telecommunications, IT solutions and services, IT consumer and office products, and diversified activities. Headed by Colaninno, the new supervising organisation will play a more active role in monitoring the performance of its units through budget and control processes and will take responsibility for managing group human resources.
The company has suffered a disastrous second half performance. Provisional figures released in January, to be confirmed at the end of this month, show group sales for the 1996 calendar year falling by 16 per cent to approximately $5.1 billion.
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