Shares in Philips Electronics slid early on Monday by as much as 4%, after profits plunged 79% on losses at its flat-screen unit.
A world oversupply of flat screens has caused prices to fall
Net profits at the Netherlands firm were 117m euros (£80m; $151m) in the three months to March, down from 550m euros in the same period of 2004.
Revenues were virtually flat at 6.64bn euros, on lower flat-screen prices and falling chip sales.
The firm is to invest in medical systems, lighting and small appliances.
These sectors are less cyclical, with returns less susceptible to fluctuations in demand, the firm said.
By contrast, the firm's results reflect a cyclical low point for technology firms. In the past seven days, there have been disappointing results from US-based IBM, from Samsung of Korea, and from Sony Ericsson, the Japanese-Swedish mobile phone venture.
Gloom about the technology sector has caused world stock markets to fall as investors fear the US economy - and in its wake - the global economy may be slowing.
Philips said the 433m euro fall in its profits was the result of lower contributions from unconsolidated companies - those which are not included in the group's main accounts.
Later on Monday, the firm's shares recovered to edge up 0.15%.
Chief among them was its flat-screen joint venture with Korean tech group LG.
Overall, Philips derived profits of 457m euros in the first quarter of 2004 from its unconsolidated ventures - including 215m from LG Philips and 156m from Philips' participation in Atos Origin, a computer services company.
This year, in contrast, LG Philips contributed a loss of 34m euros.
Gerard Kleisterlee, Philips' president and chief executive said: "The cyclicality of the technology sector had a negative impact, especially on our results from unconsolidated companies."
Oversupply of flat screens in the world market for the screens - used as PC monitors and for televisions - has contributed to the fall in flat-screen prices.