Philips Electronics shares plummeted when the Dutch company warned that its second half profit was ?most unlikely? to be up on last year.
Analysts complained that this contradicted previous Philips predictions - in July it said its second half would outdo the 2.18 billion guilders in operating profit from the same period last year.
This is also the third time this year that the company has reported disappointing figures. The first and second quarter profits were lower than expected due to poor performance in the semiconductor division, but Philips would not offer reasons for the third quarter shortfall until results are announced on 24 October, although it said it would introduce further restructuring measures. ?We believe it necessary to accelerate planned actions for recovery,? the company said.
These will include a return to the PC market after an absence of three years, although Philips does not intend to manufacture its own computers again. The company will sell pocket computers in the US from next month and portables in Asia by the end of the year. Asia is the chief business growth area targeted by new chairman Cor Boonstra. Philips is working with Hewlett-Packard, Microsoft and NEC to produce the notebooks, and with NEC and Hitachi on the portables, both of which will contain Philips chips. Philips withdrew from PC production in 1993, partly because its models did not run Microsoft operating software.
Reorganisation, including cost cutting measures and job losses, have been on the cards since Philips tapped Boonstra from food giant Sara Lee to be its chairman. Boostra is expected to wield his axe over the consumer products and audio-visual divisions, which are under pressure from European consumer recession and Asian competition. Boonstra succeeded Jan Timmer, who rescued Philips from financial ruin with a radical restructuring - clearly there is still some work to be done however.
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