Philips goes on crash diet

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PHILIPS is to sell assets and reduce inventories worth hundreds of millions of pounds in an attempt to cut debt.

The troubled Dutch electronics group, which last month issued a profit warning, had 16.5 billion guilders (pounds 5bn) of debt at the end of last year against assets of 50 billion.

Philips said it would embark on a series of property disposals and a programme to cut its 25 billion guilders of inventories and receivables. The group calculates that each 1 per cent reduction in these would release 250 million guilders in cash and save 25 million in interest payments.

The plan emerged as shares in the group fell 15 per cent to 24.50 guilders at one point yesterday on the news that two executives had resigned from the core consumer electronics business, seen as vital to the company's fortunes.

Pieter Groenenboom, second-in-command at Philips' consumer electronics division and leads its high-definition television strategy, is to become adviser to the group management committee.

The company announced yesterday that Gaston Bastiaens, president of interactive media systems - including interactive compact disc - would be joining Apple Computer of the US.

At the same time the chairman, Jan Timmer, attacked 'excessive reaction by stock markets' to Philips' recent problems.

He agreed it was partly because the company had provided 'disagreeable surprises' in the past.