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Philips slashes more jobs
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July 17, 2001: 5:11 a.m. ET
Europe's largest electronics group hit by slowdown; job losses hit 10,000
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LONDON (CNN) - Europe's largest electronics group Philips said on Tuesday it would slash up to 4,000 more jobs as it reported huge quarterly losses.
Chief Executive Gerard Kleisterlee told a news conference the cuts would be at its semiconductor business, the third-largest in Europe, and would bring total job losses in the group this year to "well over 10,000."
Kleisterlee had earlier said in the company's earnings statement that he did not see a recovery in the chip sector until next year.
The Dutch company said second-quarter losses, including one-time items, amounted to  770 million ($656 million) compared with a profit of 3.6 billion in the same period last year, which included a gain of 2.9 billion.
Philips, which makes products such as flat-screen televisions and computer chips to toasters and light bulbs, issued a profit warning on June 15. In common with electronics and technology market leaders on both sides of the Atlantic, Philips is feeling the pain of the global economic slowdown.
The company said sales in the second quarter dropped 16 percent to 7.7 billion. Losses from operations in the three months were 745 million compared with a profit of 724 million in the same period last year, the company said.
Chip sales dropped 19 percent to 1.13 billion. Electronic component sales to the telecoms and computer industries plunged 40 percent in the quarter to 807 million. Sales of its consumer electronics goods fell 18 percent to 2.52 billion, the company said.
"For semiconductors our current expectation is that the industry will not see a recovery before 2002," Philips said.
Philips said its losses included restructuring charges of 448 million, charges for inventory adjustments of 143 million and charges totalling 123 million for the settlement of litigation and other items.
In June, the company said it expected to make a significant loss for the whole company in the second quarter and come close to break even for the year.
"The economic slowdown that started in the USA last year has spread to other parts of the world now," said CEO Kleisterlee in a statement.
"Markets for telecommunications and PC and PC peripherals continue to show weakness," he added. "Our semiconductors, components and consumer electronics businesses have been significantly impacted by this trend."
Philips repeated in its latest earnings statement that it expected to reach break-even or record a small loss before one-time items for the whole year, with earnings bottoming out in the third quarter.
It also expected to take additional charges of between 250 million and 300 million in the second half. The latest charges come on top of a 350 million charge Philips said it would take in April to reorganise its businesses and pay for the loss of 7,000 jobs.
In addition to its chip woes, Philips announced three weeks ago it would axe 1,235 jobs in France as it closed its loss-making mobile phone business. 
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