Dutch electronics giant Philips appears to be making inroads in its battle against massive losses as a result of a worldwide slump in the consumer electronics industry.
Stockholders reacted positively after Philips posted a net income from business operations of $ 104 million. That’s down 17% from the same period a year earlier but promising compared to a disappointing drop of 36% in first-quarter combined net income.
Euro slump blamed
At a press conference last week at its Eindhoven-based HQ, the company blamed poor economic conditions in Europe for its continued slump. But media analysts are reading the new figures as a sign that the crisis-ridden company could be on the mend.
Philips booked a drop in sales for the first six months of 1993 to $ 14.2 million, down 2% from the same period a year earlier. Total net income in the first six months, however, was up from $ 126 million last year to $ 677 million, largely due to extraordinary income of $ 572 million from the sale of Philips’ 35% interest in Matsushita Electronics Corp. in Japan.
It was a little over a year ago that Philips president Jan Timmer warned of a net loss for the conglom for the first time in its history, sending stocks tumbling.
Following a 56% drop in second-quarter profits in 1992, Philips embarked on a longterm recovery plan that had ended, among other things, in a loss of some 5, 800 employees in the first half. The company has forecast cost-cutting measures that could result in 15,000 staffers being laid off.
Consumer electronics sales dropped from $ 5.16 billion to $ 5 billion in the first six months vs. a year earlier. Aside from ongoing cost-cutting measures, the thrust of the company’s long-term recovery is aimed at development of three key products: digital compact cassettes, interactive compact discs and high-definitionTV.
In the meantime, majority-owned Philips’ subsidiary Polygram, on the heels of announcing its acquisition of Motown Records, posted record interim half-year figures, with net profits up 19% in the first six months of 1993.