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Thu, Mar 14, 2002 - Page 21 News List

Philips will stay the course in US

CONSUMER ELECTRONICS Though Europe's largest maker of consumer devices is suffering losses in the US, the Dutch firm plans to ride out the rough times

BLOOMBERG , HANOVER, GERMANY

Royal Philips Electronics NV, Europe's largest maker of consumer electronics, doesn't intend to exit its US electronics business as it works to return the unit to profit.

"It would very difficult to have a good position as a global consumer electronics company without being in the US," said Guy Demuynck, Chief Executive Officer at Philips Consumer Electronics, in an interview at the technology trade fair Cebit in Hanover, Germany. "It's crucial we're successful in the US."

Amsterdam-based Philips last month reported a record loss of 1.14 billion euros (US$1 billion) in the fourth quarter of last year on slumping sales of televisions, semiconductors and computer screens. It also had its first annual loss since 1996.

Philips posted a loss of 37 million euros at the part of its consumer electronics unit that makes televisions and stereos in 2001, including an unspecified loss at its US business.

The management at the business, located in Atlanta, has been given a three-year roadmap with "clear demands," said Demuynck. That plan doesn't call for the unit to show a profit for the full year 2002, he said.

"We certainly don't have the intention to exit the US market," he said. "We want to be a global leader in consumer electronics. That includes being in the US."

Philips Chief Executive Officer Gerard Kleisterlee said in a December interview with a Dutch business magazine he was prepared to close the US consumer electronics business if results there didn't improve. The business "on balance has been loss-making in the past 15 years," Kleisterlee said in the interview.

"Too early and too quickly has been written Philips will throw in the towel in the US," Demuynck. In the fourth quarter, traditionally the best period for Philips' consumer electronics business, the US "needs to show a clear improvement."

Tough battle

* Philips reported a record loss of 1.14 billion euros (US$1 billion) in the fourth quarter of last year on slumping sales of televisions, semiconductors and computer screens.

* The company's US unit isn't expected to show a profit for this year.

* According to the CEO of Philips, the US unit "on balance has been loss-making in the past 15 years."


Philips, founded in 1891, is the biggest maker of light bulbs and electric shavers, as well as Europe's third-largest chipmaker.

Demuynck reiterated Philips may farm out the production of low-growth products such as standard TVs after it did the same with the manufacturing of VCRs last year.

"We don't exclude the possibility we'll outsource the production of lower-end TVs. That doesn't mean we'll exit that business, it means we want to allocate the resources for higher-growth products."

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