Philips switching off TV unit after 83 years
Tuesday 19 April 2011
Philips has given a strong hint that it is considering switching off its loss-making television business by unveiling plans to hive off the division into a joint venture.
The Dutch electronics giant, which posted a 31 per cent fall in quarterly profits yesterday, said that its TV operations would now be run in a long-term partnership with a Chinese company, TPV Technology.
The joint venture will be split 70/30 in favour of the Hong Kong-based business, with Philips retaining an option to sell its remaining stake to TPV after six years.
Philips showed its first TV to the Dutch public in 1928, but the division recorded losses of nearly €1bn (£880m) since the start of 2007, including €87m in the first three months of 2011. This dragged down the company's first-quarter profits from €201m a year ago to a lower-than-expected €138m, despite an overall 6 per cent rise in group sales.
Steve Klink, of Philips, said of the joint venture: "We have to be realistic. Profitability has been an issue for us. The TV industry at large is under pressure and we needed to find a structural solution to go forward with. This announcement will give our business new life."
The decision to spin off the TV arm is the first major action taken by Philips's new chief executive, Frans van Houten, who claimed the move would enable the division to return to profitability.
However, Martin Prozesky, a senior analyst at Stamford C Bernstein, said that it was a clear indication Philips was leaving the TV industry. "TPV are a good choice, but will they turn the TV arm around? I don't think so," he added. "This is just Philips managing the decline. They are effectively exiting the industry. It is not a solution to make them a big player again. They are just slowing down the erosion."
Shares in Philips ended down 0.92 per cent at €20.89 in Amsterdam.
- 1 The West has it totally wrong on Lee Kuan Yew
- 2 Watch: Man takes selfie every mile of 2,600 mile hike, creates amazing timelapse video
- 3 The day I starred in Only Fools and Horses
- 4 #FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
- 5 Scientists have discovered a simple way to cook rice that dramatically cuts the calories
Germanwings captain Patrick Sondenheimer tried to break into locked cockpit door 'with an axe' as plane was descending
Saudi Arabia says it won't rule out building nuclear weapons
The battle for the Middle East's future begins in Yemen as Saudi Arabia jumps into the abyss
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
#FreeTheNipple: Women in Iceland bare breasts in solidarity with trolled student
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
Revealed: Putin's army of pro-Kremlin bloggers
Germanwings plane crash: Co-pilot Andreas Lubitz wanted to 'do something people would remember him for'
Andreas Lubitz: Knee-jerk reaction to 9/11 enabled mass murder
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...