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Philips to post 2001 loss
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October 16, 2001: 9:24 a.m. ET
Consumer electronics company to make $543 million loss, first since 1996
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LONDON (CNN) - Philips Electronics posted bigger than expected third-quarter loss as demand for mobile phones and chips continued to diminish.
The company, which is on course for its first annual loss since 1996, said it expects a 2001 loss of about  600 million ($543 million) and a fourth-quarter loss of between 200 million and 250 million.
"The electronics parts of our company continue to suffer heavily from continued poor market conditions in the telecom and PC-related businesses," said Chief Executive Gerard Kleisterlee.
"Consumer confidence in all major markets has been slipping this year, a trend that has accelerated after the tragic events of September 11."
A U.S.-led economic slowdown and worldwide job losses are making consumers think twice before splashing out on replacing electronic goods, while mobile phone sales have stagnated.
Shares in Philips, which have halved since the beginning of the year, rose 6.6 percent to 24.75 in afternoon trade in Amsterdam, after Europe's third biggest semiconductor maker said chip orders were improving.
Chief Financial Officer Jan Hommen said he was beginning to see an increase in semiconductor orders and that fourth-quarter sales would be "slightly higher" than in the third quarter.
The semiconductor business is the most closely watched of the six units at Philips, because in good times it has the highest profit margins and growth rates. Semiconductor revenues declined 43 percent year-on-year due to declines in unit sales and prices, resulting in a loss from operations of 291 million, compared with a profit of 373 million a year ago.
"I've been telling all of my clients to buy," said Didier Scemama, an analyst at ABN AMRO in London. "The third quarter was a disaster, but now it's behind us."
Philips posted a third-quarter net loss of 799 million, wider than the 588.4 million loss forecast in a Reuters poll of eight analysts. It also compared with a net profit of 2.1 billion in the year-earlier quarter.
To help reduce losses, Philips said it would accelerate its cost-cutting measures and further trim working capital and inventories to reduce overhead by 25 percent, citing no time frame to reach this goal.
Hommen, who did not rule out further job cuts, said Philips would attempt to cut 300 million euros off the 1.2 billion euro overhead costs. Philips has already announced job cuts of about 11,000 employees, from its workforce of 210,000.
--from staff and wire reports 
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