Plhilips is hiving off its once leading television business, the first step by new chief executive Fransvan Houten to boost flagging profit at Europe's biggest consumer electronics maker.
Philips is moving its loss-making TV business to a 30:70 joint venture with Hong-Kong based monitor maker TPV and has the option to sell out.
Van Houten, a restructuring ex- pert who took over as CEO this month, said he was assessing the profitability of Philips' 400 or so business areas and “taking the blanket off“ its laggards, a hint that further sales could be on the cards.
“We are not yet firing on all cylinders... There's much unlocked potential in Philips”, Van Houten told Reuters Insider. Van Houten said he would present a new strategic plan in the second half of the year.
Three weeks into his new job, he has scrapped his predecessor's target for an annual revenue in- crease of 2 percentage points above global gross domestic product growth between 2011 and 2015, citing the TV divestment and the impact of Japan
Philips did not give a value for the TV deal, saying it would receive a deferred payment from TVP. It said all 3,600 employees at the TV business would transfer to the Hong Kong company, and job cuts could not be ruled out.
TPV, which controls about 33% of the global computer monitor market, posted a near 20% rise in 2010 profit.
“It's a major positive,“ ING analyst Sjoerd Ummels said of the deal. “It's clear (Van Houten) will address laggard businesses.“
These could include the audiovisual and multimedia business, which Philips said would be merged into its life- style entertainment unit in Hong Kong .
Van Houten said even acquisitions from the past decade would be scrutinized--including home healthcare firm Respironics and lighting fixtures group Genlyte, which have not yet shown sufficient synergies.
Philips is the world's biggest lighting maker and a top three hospital equipment maker.
The TV unit, which makes up less than 10% of group sales, has gone from being a global leader to a thorn in the firm's side, having notched up losses of almost a billion euros since the beginning of 2007.
Philips, which competes with General Electric and Siemens in the hospital and lighting markets, also reported first-quarter earnings earlier in the day.
Weak consumer demand pulled the figures below expectations. First quarter net profit fell 31% to 138 million missing the 161 million forecast in a Reuters poll.
(Source -: mintlive)
