Philips to drop PCs: Restructuring move to cost 5,000 jobs

PHILIPS, the Dutch electronics giant, is to abandon the personal computer market and will cut its catalogue of consumer electronics products by up to 20 per cent in a move that will involve the loss of around 5,000 jobs.

The job losses form part of a wider restructuring package to improve profitability announced earlier this month, in which up to 15,000 jobs will go. The group set aside 1.2bn guilders ( pounds 443m) to cover the restructuring costs, leading to a loss of 900m guilders in 1992.

In 1991, Philips sold the bulk of its computer business to Digital Equipment Corporation but retained personal computers as part of the consumer electronics division.

Last year, fierce price wars and eroding margins prompted a restructuring in the PC arm. Philips now says that the operation is no longer viable and it is closing the manufacturing plant in Montreal, Canada, which employs 125 people. The company did not comment on the fate of the computer assembly and packaging plant at Tilburg in the Netherlands.

In consumer electronics, the group is expected to concentrate on high value-added products, where the margins are under least pressure. The division lost 553m guilders last year.

There has been speculation that Grundig, in which Philips has a 31.6 per cent stake, might bear many of the job losses. Grundig made a loss last year of 484m guilders, and its results were consolidated by Philips for the first time.