Nolan Lazarus says he sells one 42-inch flat-screen television made by Royal Philips Electronics NV every couple weeks. The P.C. Richard & Son Inc employee sells as many as 10 from Sony Corp in the same span.
"Sony is the hottest seller," Lazarus said in a back room of the company's store on 14th St. in Manhattan. "People don't know the Philips brand."
Gerard Kleisterlee, who took the helm at Philips in May, needs to change that and boost sales, or stop selling TVs and stereos in the US altogether, investors said. Europe's No. 1 consumer electronics maker has been unprofitable in the US, "on balance," for 15 years, Kleisterlee said in December. The business lost 76 million euros (US$67 million) in 2000 and at least as much last year, analysts estimate.
"They have to decide if they want to muddle through and keep piling on the losses," said Peter Bekius, who helps manage 7 billion euros in stocks, including Philips shares, at Dexia in Amsterdam. "It's important to be a global player, but it's important to make profits, too."
The 110-year-old company, which also makes products ranging from electric shavers to semiconductors, will probably post a 135 million-euro loss in the three months ended March 31, based on the average estimate of eight analysts surveyed by Bloomberg News. That would be its fourth straight quarterly loss.
Amsterdam-based Philips lost a record 2.6 billion euros last year, its first unprofitable year since 1996. The shares have gained 11 percent this year, compared with a 13 percent advance by Sony and a 3 percent decline in Matsushita Electric Industrial Co, the biggest maker of consumer electronics, with brands including Panasonic and Technics.
Chief Executive Officer Kleisterlee, 55, told the magazine Elsevier in December that he was prepared to close the US business -- where the company makes just under a fifth of its consumer electronics sales worldwide -- if results don't improve within three years. That's a move some investors would welcome.
"My preference would be if Philips decided to stop with consumer electronics in the US," said Rob Radelaar, who helps manage 10 billion euros in assets, including Philips stock, at Robeco in Rotterdam. The business won't "help them meet their target of more than 10 percent sales growth," he said.
The 2000 loss at Philips's US electronics unit came on sales of 2.1 billion euros, a drop of 8 percent from the year before. Analysts estimate the company lost at least as much last year on sales of about 2 billion euros. Philips typically doesn't break out sales and profit figures at the unit.
The company, which spent US$100 million on marketing for the US consumer electronics business in each of the past two years, has set performance targets for managers there, Philips spokesman Andre Manning has said. He declined to disclose details.
The company hired Lawrence Blanford from appliance maker Maytag Corp last year to head the US electronics unit. It's also working to gain better shelf space from retailers such as Circuit City Group and Best Buy Co.
The company sells TVs and stereos in the US under the Magnavox and Philips brands.
To target young people, Philips is posting ads on AOL Time Warner Inc Web sites and developing portable MP3 players that it will market with Nike Inc, the largest maker of athletic shoes, starting in September.
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