Philips results dive

More bad news expected from Philips next quarter

Philips Electronics plans to cut up to 7,000 jobs as the economic slowdown sends its profits tumbling.

The Dutch group forecasts further hardship for the second quarter of 2001, as it reported a sharp fall in profits for the first three months of the year.

Europe's largest maker of consumer electronics and lighting, and third biggest semi-conductor maker reported a net profit of 106m euros ($93.9m) for the first quarter of 2001, a 82% fall on last year.

Analysts had expected the Dutch company to report a first quarter net profit of between 178m to 370m euros.

Worse to come

The company says the situation was also likely get worse before it improved.

"We see no signs that the slowdown in economic activity in certain parts of the world, particularly the US, is near its end," it said in statement.

Poor farewell for Boonstra

"This will continue to cause low growth and high price erosion for some of the markets in which Philips is active," it added.

Chief Financial Officer Jan Hommen would not comment on where jobs would be cut but said the process was "in various stages of implementation".

In an effort to cut costs, the company has already ended or is in the process of not renewing 2,600 temporary and subcontract positions, on top of the 7,000 job losses, Mr Hommen said.

Philips, which employs a total 219,399 staff, said it would give further details of cost savings in the second quarter.

Restructuring

The company, which gets a new chief executive, Gerard Kleisterlee, on 1 May, also announced a restructuring at a pre-tax cost of 350m euros.

The restructuring, to be detailed in the next few months, would focus on under performing activities in components and consumer electronics.

The poor results are a further blow for the chief executive, Cor Boonstra, who is just two weeks away from retirement.

Last week he came under investigation by the country's public prosecutor's office for possible involvement in insider trading in shares of another company.