Downturn to hit Philips profits

Consumers are cutting back on big purchases such as flat-screen TVs

Europe's biggest consumer electronics firm Philips has warned that it will make less revenue as the economic downturn takes its toll.

Gerard Kleisterlee, Philips' chief executive, said the downturn was "faster" and "deeper" than expected and was without "recent comparison".

Rivals Sony, Sharp and Panasonic have also warned that profits could be hit.

And US chipmaker AMD warned on Thursday that its fourth-quarter revenue would drop by about 25%.

Philips said that its lighting and consumer products were being hardest hit.

"The speed and ferocity by which the weakening economy is affecting demand in key markets is now also taking its toll on the financial performance of Philips," Mr Kleisterlee said.

The company also said it would write down the value of its stakes in LG Display and NXP, formerly Philips' semiconductors arm, taking a 1.1bn-euro ($1.4bn; £0.95bn) charge.

Philips cut sales targets for its lighting, health care and consumer electronics divisions and said it would not meet a target of doubling operating earnings by 2010.