Philips gives up TV unit to HK venture
By Roberta B Cowan |
April 19, 2011, Tuesday
|
Print Edition
Print Edition
PHILIPS is hiving off its once leading television business, the first step by new chief executive Frans van Houten to boost flagging profit at Europe's biggest consumer electronics maker.
Philips is moving its loss-making TV business to a 30/70 joint venture with Hong Kong-based monitor maker TPV and has the option to sell out. The Dutch group has struggled to compete against players like Samsung and LG Electronics.
Van Houten, a restructuring expert who took over as CEO this month, said yesterday he is assessing the profitability of Philips' 400 or so business areas, a hint that further divestments could be on the cards. "We are not yet firing on all cylinders. There's much unlocked potential in Philips," van Houten said.
Philips has 3,600 staff at the business, all of whom will be transferred to TPV. It did not give a value for the deal, saying it would receive a deferred payment from TPV.
Philips showed its first television to the Dutch public in 1928.
But Philips, once a global leader in TVs, can no longer compete with lower-cost rivals. The unit, which makes up less than 10 percent of group sales, has become a thorn in the firm's side, having notched up losses of almost a billion euros since the beginning of 2007.
Philips said TPV will purchase 70 percent of the shares in the joint venture for a deferred purchase price, equating to four times the joint venture's EBIT over the year 2012 until the year Philips exercises its right to receive the purchase price.
Philips also has an option to sell the remaining 30 percent stake to TPV for the same terms after six years.
Philips unveiled first-quarter net profit of 138 million euros (US$197.16 million), down 31 percent from a year ago and below forecasts.
A Reuters poll had forecast quarterly net profit to fall 19.5 percent to 161 million euros.
Philips is moving its loss-making TV business to a 30/70 joint venture with Hong Kong-based monitor maker TPV and has the option to sell out. The Dutch group has struggled to compete against players like Samsung and LG Electronics.
Van Houten, a restructuring expert who took over as CEO this month, said yesterday he is assessing the profitability of Philips' 400 or so business areas, a hint that further divestments could be on the cards. "We are not yet firing on all cylinders. There's much unlocked potential in Philips," van Houten said.
Philips has 3,600 staff at the business, all of whom will be transferred to TPV. It did not give a value for the deal, saying it would receive a deferred payment from TPV.
Philips showed its first television to the Dutch public in 1928.
But Philips, once a global leader in TVs, can no longer compete with lower-cost rivals. The unit, which makes up less than 10 percent of group sales, has become a thorn in the firm's side, having notched up losses of almost a billion euros since the beginning of 2007.
Philips said TPV will purchase 70 percent of the shares in the joint venture for a deferred purchase price, equating to four times the joint venture's EBIT over the year 2012 until the year Philips exercises its right to receive the purchase price.
Philips also has an option to sell the remaining 30 percent stake to TPV for the same terms after six years.
Philips unveiled first-quarter net profit of 138 million euros (US$197.16 million), down 31 percent from a year ago and below forecasts.
A Reuters poll had forecast quarterly net profit to fall 19.5 percent to 161 million euros.
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