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Telephone unit cut off
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October 22, 1998: 5:43 a.m. ET
Philips and Lucent pull the plug on underperforming joint venture
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LONDON (CNNfn) - Dutch company Philips Electronics is pulling out of its telephone joint venture with the U.S.' Lucent Technologies, as had been expected.
The joint venture, which launched on October 1, 1997, has proved a "disappointment to both parties," according to Philips chief executive Cor Boonstra.
Both companies will take back the assets they injected into the joint venture, known as Philips Consumer Communications.
Philips, which owned 60 percent of PCC, plans to continue with its cellular phones and cordless businesses, but the sale of its paging operations is "a serious consideration".
Lucent (LU) plans to sell or close its share of PCC's activities.
Some 5,000 workers will return to Philips, with 8,400 returning to Lucent. Philips warned that its workforce would be "substantially downsized", and that its ambitions will be "scaled back".
The move will mean a restructuring charge in the fourth quarter, although the company would not say how much it might be.
Philips also announced third-quarter earnings at the top end of analysts' forecasts. The group earned 449 million guilders ($243 million) from continuing operations, or 1.24 guilders per share, down 37 percent from 721 million or 2.06 guilders per share, in the same period last year.
In the first nine months Philips earned 2.02 billion guilders, down from 1.87 billion last year.
In Amsterdam Philips shares jumped nearly 4 percent to 115.8 guilders.
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Lucent
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