Philips staunches losses with job cuts

 

Gallery

By Reuters

Posted on 26 Jan 2009 at 16:04

Philips' first quarterly loss since 2003 has provoked the company into slashing 6,000 jobs.

Philips posted a net loss of 1.5 billion euros, following the trend set by chief rivals Samsung and Sony. The loss included a 1.3 billion euros writedown of its stakes in NXP Semiconductors and LG Display.

Philips immediately announced plans to accelerate its restructuring programs, which will see around 6,000 jobs cut in 2009. The plans are expected to deliver about 400 million euros in cost savings per year, starting in the second half of 2009.

Despite the downbeat results, analysts found something to cheer in the announcement.

"We were expecting some bad news and I don't think this is worse than the market has been anticipating," says Petercam analyst Eric de Graaf. "It has been taking proactive initiatives in the past year and in this sense, management has been doing much better than some of its peers, such as Sony," he added.

Philips claims the effects of the "steep downturn" have led to a sharp reduction in demand, especially in its consumer lifestyle unit, which makes TVs and MP3 players.

Philips also has halted its share buyback program until further notice.