Loss-hit Philips adds to the gloom in techs

PHILIPS Electronics today added to the deepening gloom in the technology industry with a warning that it would do no better than break even this year.

"We remain very cautious about the economic development for the rest of the year as visibility remains low," the Dutch giant said.

"For semiconductors our current expectation is that the industry will not see a recovery before 2002."

It reported a second-quarter net loss of e 770 million (468 million)compared with a e 3.6 billion profit in the previous corresponding period.The loss before special charges and one-off gains was e 348 million,down from the e 699 million profit of a year ago.

The consensus forecast was a e 358 million loss with estimated losses ranging from e 285 million to e 500 million.

Philips shares were down 4.4%at e 27.91 after being 6%lower shortly after trading opened.Heavy losses in its chip division have already been blamed for the stock falling 25%this year.

"It 's not just the figures because they were expected but it 's the general outlook," said Amstgeld trader Bob Homan.

The market had been braced for the result,with Philips warning it would report a "significant "loss in the second quarter as a result of sluggish sales of its semiconductors,telecoms and PC-related products.

It said the fall in demand for these products has accelerated in the second quarter, with the malaise now affecting all geographical areas.

However,Philips,whose chief financial officer is Jan Hommen,surprised some analysts by predicting that earnings would hit a trough in the third quarter.

"In some ways it 's pretty positive,"said one."We were expecting a very grim outlook statement and I didn 't expect them to stipulate a bottom."

Philips has unveiled plans to reduce its stake in its unprofitable mobile phones unit.It will take a charge of up to e 300 million in the second half in relation to cost-cutting measures.

Second-quarter sales were down 16%at e 7.68 billion.

Most of the charges related to the 7000 job cuts in units that make television monitors and mobile phones.

Philips agreed earlier this month to buy Marconi 's medical scanning business for $1.1 billion (815 million) cash to make it the world 'second-biggest maker of diagnostic imaging equipment.

"People were hoping for Philips to say the bottom is behind us and the second half would be better than the first but that is questionable now,"said fund manager Gert Jan Geels of Eureffect.

Copyright 2001
Provided by ProQuest Information and Learning Company. All rights Reserved.