Bad news all round in the year of the cash call .sx Gloom is the key word for the results season , as Heather Connon reports .sx COMPANIES representing 40 per cent of the value of the stock market are due to publish results in the next six weeks .sx And the picture they paint is likely to be one of almost unremitting gloom .sx The results will cover the first six months of the year when Britain was in the grip of one of the worst recessions since the war .sx Companies as diverse as BAT Industries and BTR , George Wimpey and T&N , all reporting this week , will demonstrate this as they report plummeting profits , or even losses .sx Later in the month , RTZ , Rolls Royce , Ratners , Dalgety and Prudential Corporation are likely to add to the stream of bad news .sx But even the worst reporting season for a decade is unlikely to halt the stately rise of the FT-SE 100 , up more than a quarter since the beginning of the year .sx The market already knows the news will be bad - after all , its analysts have spent the best part of the last year downgrading forecasts .sx But this is expected to be the worst period and the market's eyes are firmly on the upside , which means next year and 1993 .sx It is , however , still possible that the reporting season will cause the market to falter .sx The two key factors will be the level of rights issues and what company chairmen say about current trading .sx This has been the year of the rights issue .sx Already , companies have raised more than pounds7bn to repair ravaged balance sheets and to prepare them for the upturn .sx Most analysts expect at least a further pounds3bn of cash calls by the year-end , which will put the total at pounds10m compared with only pounds3 .sx 7bn last year and pounds7bn in the peak year of 1987 .sx There are many potential candidates with large borrowings and low interest and dividend cover .sx The market favourites , however , are Blue Circle - which reports on Thursday - and Cadbury Schweppes , which produces interims on 11 September .sx So far , most of the cash calls have been easily absorbed .sx But the institutional cash mountain is fast being depleted .sx Analysts at UBS Phillips&Drew estimate that institutions were holding pounds25bn at the beginning of the year .sx Since then , they have not only swallowed the rights issues , but also the pounds4 .sx 9bn water privatisation and added significantly to their holdings of gilts - perhaps by as much as pounds10bn by the end of the year .sx Paul Walton , UK equity strategist at James Capel , thinks future rights issues could start straining institutional tolerance , and companies asking for more funds could see their shares suffer - particularly if they have been forced to offer a large discount to get the issue away .sx So far , the discount to the share price has averaged about 20 per cent ; as the year goes on , that could grow .sx For most companies reporting over the next few weeks , the statement on current trading will be studied with much more interest than the figures themselves .sx The hope is that chairmen will now be saying the economy is bumping along the bottom and there are glimmers of hope on the horizon .sx County NatWest believes unexpectedly bad news could mean a period of consolidation .sx But , as Mr Walton says , that is likely to be the lull before the surge as the recovery picks up next year .sx Headlam acquisition near .sx THE FOOTWEAR company Headlam Group , were Colin Wyman was ousted as chairman in May , said yesterday that it was involved in talks to make a " very substantial acquisition " , writes Robert Cole .sx The company said negotiations to buy a textiles distribution concern with a turnover of pounds85m were near to completion .sx The news prompted a flurry of activity in the Northampton-based company's shares .sx The stock closed up 4p at 62p .sx On figures for 1990 the acquisition will increase the size of the company threefold .sx Headlam made pounds458,000 pre-tax profits in 1990 on sales of pounds23 .sx 3m , down from pounds936,000 previously .sx Releasing the annual results in April , Headlam said it was persevering with its acquisitive policy despite having drawn a blank on several occasions .sx Why laggard GEC needs new boss .sx Clare Dobie , City Editor , argues that finally Lord Weinstock's day has come .sx LORD Weinstock once said he would know when to leave GEC .sx Nobody would have to tell him .sx But after 28 years as managing director of Britain's biggest electronics company , that time has now come .sx Once regarded as the country's most brilliant industrialist , his reputation has become tarnished .sx 'Arnie' has outstayed his welcome .sx The company he created through an unusual combination of spark and attention to detail is in decline , with falling profits and a lagging share price .sx Investors , who are seeing other shares race ahead , have a rare chance to express their views on Friday at the company's annual meeting .sx But experience suggests none will voice criticism .sx To be fair , they have little power .sx Though shareholders will be asked to vote on the position of his 39-year-old son , Simon , they will not have the chance to vote on Lord Weinstock's continued presence on the board , despite his 67 years of age .sx Other directors are subject to re-election every three years , but not Lord Weinstock .sx Thanks to a provision in the company's articles , adopted in 1900 , the managing director is exempt from the requirement for re-election .sx While many shareholders privately criticise the company's recent performance , they are reluctant to say anything unfavourable in public .sx He remains widely revered for the achievements of the 1960s .sx A statistics graduate and former civil servant , he joined what was to become GEC at the invitation of his father-in-law .sx Michael Sobell , in 1954 .sx In 1967 , it acquired Associated Electrical Industries and a year later English Electric .sx Unlike the AEI bid , the deal with EE , then the largest merger seen in the UK , was friendly .sx It had the backing not just of Lord Nelson , who headed EE , but of the Labour government .sx GEC was seen as a standard-bearer for Britain in general and the electronics industry in particular ( something which would be anathema to the present Government , with its opposition to picking winners) .sx Lord Weinstock became an industrial hero , credited with single-handedly improving Britain's balance of payments .sx He was widely feared and respected .sx Relations with government have remained an important feature of the company's operations , in part reflecting its dependence on the Ministry of Defence .sx The current chairman is Lord Prior , the former secretary of state for employment .sx And his predecessors include former Tory ministers Lords Carrington and Aldington .sx Several other characteristics visible in 1968 , the anno sic !sx mirabilis , remain traits of the company to this day .sx They include meanness ( the company is known ironically as the Generous Electric Company ) , attention to detail - Lord Weinstock reportedly once said , " Once you drop the detail then I believe the justification for my activity comes to an end " - and a determination to have cash in the bank .sx Over the years the style may have hardly changed but the performance has - for the worse .sx In the past 10 years , pre-tax profits , earnings per share and net assets have all fallen in real terms ( after adjusting for the effects of inflation) .sx But GEC's stated pre-tax profits rose 40 per cent .sx In the same period the profits of two other leading British companies , ICI and Marks and Spencer , rose by 190 and 177 per cent respectively .sx Its performance also looks dull by the side of overseas electronics companies such as Siemens of Germany , where after-tax profits rose 228 per cent in the last decade .sx GEC's poor profits performance has been reflected on the stock market .sx Anyone investing pounds100 in GEC's shares 10 years ago would find they were worth almost the same today , though the pounds100 buys substantially less .sx The same amount invested in either ICI or M&S would have been worth more than pounds400 - although an investor in GEC would have received some compensation in the form of dividends .sx There are other causes for concern about GEC's recent record .sx The company is well known for having a huge cash pile , which peaked at pounds1,7bn in 1987 .sx While the cash has saved GEC from any financial embarrassment during the recession , it also suggests the company has failed to find industrial projects offering comparable returns .sx Research and development spending , though high by UK standards , lags behind the company's international competitors .sx Assuming the company's disclosed spending of pounds435m was by the majority-owned companies , R&D accounted for 7.2 per cent of sales last year , against 11 per cent at Siemens .sx Another worry is the continuing dependence on the ( declining ) defence industry .sx Broker BZW reckons it accounts for 23 per cent of attributable profits .sx Then there was the loss in 1986 of the Nimrod defence contract after nine years and nearly pounds1bn .sx This was a major blow , putting into doubt GEC's reputation as a reliable defence supplier .sx Lord Weinstock responded with spirit , instructing managers to double profits in the next three or four years .sx Collectively , they failed to deliver .sx He then took a different approach , launching a second bid for Plessey , long a thorn in GEC's side , in 1989 together with Siemens .sx The bid was accompanied by a dramatic switch of strategy .sx Having criticised Plessey for forming joint ventures , GEC went about linking up with not just Siemens , but Alsthom of France and General Electric of the US as well .sx For a short period Lord Weinstock appeared to be back to his old form , taking the initiative .sx His sense of humour seemed to improve as he announced each successive deal .sx But the promise of that period has not been fulfilled .sx GEC and Siemens have virtually gone their separate ways , and their only remaining major joint venture is GPT , the telecommunications company .sx The business owned by GE is small , focused on domestic appliances .sx And the larger venture with Alsthom , which makes power plants and fast trains , has so far proved financially disappointing .sx Margins in the joint ventures were 4.4 per cent against 9.2 per cent for the majority-owned businesses .sx As well as performance , there are worries that the joint ventures may have made GEC less vulnerable to a bid .sx In other circumstances a takeover might be the market's solution to the problem of underperformance .sx But any bidder , even assuming he could obtain approval from the MoD for a change of control , would risk losing large chunks of business to the joint venture partners .sx If market forces cannot change GEC , who or what can ?sx Shareholders , including Prudential Corporation which owns 7 per cent of the company , must be among the best placed to put pressure on the board .sx ( The Prudential's former head of investments is a director of GEC) .sx Though the larger institutions have proved ready to intervene in the affairs of small companies such as Tace , with sales of pounds36m , they are often reluctant to act in the case of larger companies such as GEC , which has sales of pounds9,5bn and 119,000 employees .sx The larger institutions nearly all profess to be interested in what has become known as " corporate governance " .sx If it is to mean anything , they must act over GEC .sx Otherwise how can their repeated call for companies to appoint non-executives to boards , to split the roles of chairmen and chief executives and for improved access be taken seriously ?sx If shareholders have had a quiet word with Lord Weinstock or his fellow directors , it has not had any noticeable effect .sx If they have not , why not ?sx Are they scared ?sx Some suggest that in recognition of Lord Weinstock's earlier achievements , they are prepared to wait for him to retire , presumably within the next three years .sx They might , however , speak out if there was any sign of his son succeeding him to the top job .sx Other would rather the authorities - effectively the Bank of England - acted , presumably remaining behind the scenes , to put pressure on him to step down .sx But if neither the shareholders nor the bank does move , it would be up to the directors .sx They could get rid of Lord Weinstock .sx He should be quick to take the hint .sx Back in 1968 he said :sx " If they [the directors] ceased to trust me I would have to go .sx " .sx