Weak demand for telecommunication and computing products resulted in a bigger than expected third quarter loss at Koninklijke Philips Electronics NV.
Europe's largest consumer electronics maker made a net loss of 799 million euros (US$727 million on Sept. 30, the last day of the period being reported), compared with a net profit of 2.1 billion euros in last year's third quarter, the company reported Tuesday.
This quarter's loss includes one-time restructuring, merger and other charges of 346 million euros, while last year's profit included one-time gains of 1.3 billion euros, the company said.
Sales for the quarter came in at 7.2 billion euros, a 23 percent drop from 9.4 billion euros last year.
Philips suffered from a slump in demand for semiconductors, mobile telephones, PC monitors, set-top boxes and video recorders. However, DVD (Digital Versatile Disc) sales continue to grow, the company said.
The company's two display joint ventures with South Korean LG Electronics Inc., one for CRTs (cathode ray tubes) and one for LCD (liquid crystal display) flat panels, are also pushing down the Philips' results, the company said.
The one-time charges pushed Philips' net result beyond the expected loss, according to Daan Muusers, an analyst with Friesland Bank Securities NV.
"There are many charges, and they are at the high end of expectations," he said, noting that with 453 million euros net loss before charges, Philips beat market expectations of loss of 540 million euros.
To weather the slide in consumer confidence and the overall economic uncertainty -- increased by the Sept. 11 attacks on the U.S., according to Philips -- the Dutch electronics giant said it would accelerate its restructuring program and focus on cutting overheads by 25 percent. Philips already said it would cut over 10,000 jobs this year. For the current fourth quarter, Philips expects to post a net loss, including special charges, of between 825 million and 925 million euros.
Philips' outlook disappointed Muusers.
"We had hoped the market would turn around, but that doesn't seem to be happening. It looks like Philips will also be taking some heavy charges in the first quarter of next year."
For the full year 2001, Muusers expects Philips to report a net loss of about 2.2 billion euros.
Shares in Philips (PHI.AMS) were up 5 percent at 24.36 euros in late morning trading on the Amsterdam stock exchange. The share price had dropped 8 percent on Monday in anticipation of the figures released Tuesday.