Ronnie05's Blog

Phillips quits Consumer Electronics Industry

Posted in Industry updates by Manas Ganguly on January 30, 2013

With a heritage and tradition of 122 years, the end couldn’t have been so abrupt. But then there it is – Phillips is exiting its Consumer Electronics business sellings it historically-core business to Japan’s Funai Electric. Phillips sold its audio, video, multimedia and accessories activities (under its subsidiary- Phillips Consumer Lifestyle) to the Japanese consumer electronics company for the almost token sum of €150 million ($201.8 million) in cash and a brand-license fee.Phillips shall pursue

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Thats curtains down for one of the biggest names in Consumer ELectronics history and the largest manufacturer of lighting, globally.

Our Consumer lifestyle business was margin dilutive to the group, so it was time to decide to move away from consumer electronics. Since we have online entertainment, people do not buy Blu-ray and DVD players anymore
Frans van Houten, CEO-Phillips

In the 1930s, Philips was the world’s biggest supplier of radios. The Dutch company invented the audio cassette in 1963, made the first videocassette recorder in 1972, and launched the compact disc in 1983. But Philips struggled to make the most of its inventions, most notoriously by losing a battle for the dominant videotape standard to Japan’s VHS in the 1970s and 1980s before failing to anticipate today’s disc-free, digital-entertainment era dominated by downloaded and streamed entertainment via the Internet.Despite steadily reducing its exposure to consumer electronics over the years, exiting the television and mobile-phone segments along the way, Philips has struggled to generate sufficiently larger profits from the business.

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Philips’ Q4, 2012 net loss was €358 million compared with a €162 million loss in the Q4, 2011
A year earlier, a €272 million loss on the sale of its television business pushed the group into the red.
For CY2012, Philips reported net profit of €231 million compared to CY2011 net loss of €1.29 billion on a 9.8% rise in revenue to €24.79 billion thanks to strong growth in emerging markets, which helped offset sluggish demand in Europe and North America.
In 2012, Philips health-care order intake grew 4% in the fourth quarter and comparable sales also grew 4%. At consumer lifestyle, comparable sales grew 2%, while at lighting, it was 4%.

Philips’s will now focus on the highly competitive medical equipment industry. Sales from its healthcare division generated 40% of group revenue in the fourth quarter, with consumer lifestyle contributing 26% and lighting, which was loss making before earnings, interest and tax, making up 32%. For Q4,2012, GE posted 7% growth in the medical equipments industry followed by Phillips at 4% and Siemens at -1%

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