EINDHOVEN, The Netherlands — Dutch electronics giant Philips more than doubled its income from ordinary operations in its second quarter, and net profits skyrocketed following a campaign on the part of new Philips president Cor Boonstra to cut costs and eliminate nonperforming assets, what he has called “the bleeders.”
Net profit from ordinary operations in the second quarter rose from 304 million guilders ($148 million) in 1996 to 693 million guilders ($338 million) in 1997. (The guilder has fallen against the dollar by nearly 20% this year.)
Total second quarter net profit rose from a loss in 1996 of $222 million to a profit of $364 million in 1997. For the half-year, total net income rose from $141 million in 1996 to $865 million in 1997.
The results, higher than expected by Philips watchers, drove the company’s share price up on the Amsterdam Stock Exchange.
Some of Boonstra’s so-called “bleeders” were in media, particularly software and services, an area heavily invested in by former Philips president Jan Timmer. Philips Media was traded in June to France’s Infogrames Entertainment, and the company’s cable interests in Europe were sold to Denver-based United Intl. Holdings.
Boonstra had said over the weekend that Philips did not have the experience or the understanding to continue in the media field.
Philips owns a 75% stake in Polygram, but at a press conference at Philips headquarters in Eindhoven Thursday, the fate of Philips’ future investments in the music and film company also were up in the air. Polygram reported a slight dip in net profits for the first half-year due to losses in its film business.
While Boonstra had earlier talked of expanding Philips’ investment in Polygram, Philips chief financial officer Jan Hommen told Daily Variety that Polygram results “are being watched very carefully,” adding, “Polygram is expected to come up to the type of returns we expect to see in all of our businesses.”