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Philips to shed factories
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August 17, 2001: 4:27 a.m. ET
Dutch company in talks to farm out manufacturing to potential partners
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LONDON (CNN) - Philips, Europe's biggest consumer electronics company, plans to shed factories that make mature products such as standard television sets.
The Dutch company confirmed comments Chief Executive Gerard Kleisterlee made in an interview with the Financial Times, saying Philips was in talks with partners that might take over those manufacturing sites.
The move is intended to improve profitability at Philips, which posted a second-quarter loss of  770 million ($656 million) on July 17, and could lead to the transfer of tens of thousands of staff, the FT said.
In July, Philips repeated 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 would be its first loss in nine years.
The company expects to axe more than 10,000 jobs this year as it feels the pain of a global economic slowdown.
Philips, which makes products from advanced flat-screen televisions and computer chips to toasters and light bulbs, said on Thursday it would shift European video cassette recorder production to Japan's Funai Electric and cut 1,000 jobs in Vienna.
Kleisterlee said as much as a quarter of the group's sales came from activities offering low growth and low returns, which should be retained only if they offered the prospect of market leadership or their performance could improve.
"There is a lack of value creation, particularly around consumer electronics," the FT quoted Kleisterlee as saying.
The plan to farm out production would turn Philips into a technology supplier and marketing organisation, with in-house production focused on newer lines such as flat-screen televisions. 
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