Philips reports big losses

The Dutch firm faces a slump in telecoms and IT

Philips, Europe's biggest consumer electronics company, has reported worse than expected losses due to the weak market for telecoms and personal computers.

The poor financial results came alongside news that fellow Dutch electronics firm ASML is to slash 1,400 jobs in the first half of next year.

The job losses at ASML, in which Philips has a shareholding, amount to 17% of the workforce.

Fortunes reversed

Philips warned in July that it could slip into loss in 2001 for the first time in nine years.

And last month it prepared the market for grim third quarter figures.

Now it has warned of a bleak outlook for the fourth quarter too.

Philips reported a loss of 516m euros (£323m; $467m), on sales down 23% in the third quarter to 7.18bn euros (£4.49bn; $6.50bn).

This compares with profits of 2.1bn euros in the third quarter of last year.

Philips forecast it would run up losses of between 200m and 250m euros in the fourth quarter of 2001.

Semiconductor difficulties

Philips chairman Gerard Kleisterlee said the losses were caused by "continued poor market conditions in the telecommunications and PC-related businesses".

Restructuring at its key semiconductor unit cost the firm 346m euros in charges.

In July, Philips said it would cut 4,500 to 5,500 jobs, or 3% of its work force, in its semiconductor unit in the second half of the year.

This comes on top of about 7,000 jobs cut in the first half of 2001 reducing the total workforce to 212,000, the company said.

Earlier this year, Philips opted to close its loss making mobile phone unit and outsource the work.

That closure cost 1,000 jobs, while the rest came from the company's attempt to adapt to a downturn in the semiconductor market.