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Sat, Nov 01, 2003 - Page 12 News List

Philips expecting sales of consumer electronics to sag

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Royal Philips Electronics NV's sales from consumer electronics in the fourth quarter may be little changed from the year-earlier period amid "mixed" consumer demand, said senior vice president frans van Houten.

Amsterdam-based Philips expects strong demand for products such as flat-panel TVs, DVD recorders and key rings that incorporate digital music players and digital cameras, said van Houten, who is chief executive of the company's consumer electronics business. Sales of older devices such as cathode-ray tube TVs may fall, he said.

"We think we'll be more at less at the same level," compared to the fourth quarter a year ago, van Houten said in an interview in Singapore. "It's a mixed picture."

In the fourth quarter last year, the consumer electronics business had sales of 2.95 billion euros (US$3.43 billion) and earned 122 million euros. Van Houten declined to comment on the outlook for profit in the fourth quarter.

Philips' consumer electronics business is Europe's biggest and contributed about 31 percent of the company's sales last quarter. The company is planning to cut 400 million euros in costs at the unit by 2005 and is promoting its "Connected Planet" strategy in which its devices will be designed to easily work together and to be compatible with services from phone companies and others.

Philips will spend S$150 million (US$86 million) over the next five years in Singapore on the Connected Planet initiative, van Houten said. The money will go towards retraining engineers, developing partnerships with other companies and universities, and studying consumers.

About 80 percent of the company's TV sets and all of its DVD players are designed in Singapore, where it employs more than 1,000 engineers focused on consumer electronics.

Philips is also working on agreements with phone companies in Asia to promote Connected Planet, van Houten said. It earlier announced similar agreements with European companies such as Telecom Italia SpA.

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