TV hurts Philips profit, weak economy looms

Philips Electronics reported a bigger-than-expected 28 percent drop, to 219 million euros in quarterly core profit on.

First-quarter earnings before interest,
tax and amortization (EBITA) fell to 265 million euros down from 370
million the year before.
"Our results are clouded, more
than we like, by the adverse situation in our TV business,
significantly lower incidental license income and some
acquisition-related charges," Philips Chief Executive Gerard
Kleisterlee said in a statement.

The company's TV business is suffering from tough competition,
especially in the United States, from low-cost rivals such as
Taiwanese Amtran's (2489.TW) Vizio brand, but it was also loss-making
in Europe in the quarter.
First-quarter revenue was nearly flat,
at 5.963 billion euros, compared with 5.93 billion a year earlier and
in line with analysts' average forecasts for 5.997 billion euros.
The
Amsterdam-based firm confirmed its target for annual comparable sales
growth of at least 6 percent from 2008 to 2010 and raised its 2010
EBITA margin target to 10 to 11 percent. It had previously forecast
more than 10 percent.
The consumer lifestyle division —
which makes TVs, electric toothbrushes, music players and coffee
machines — will continue to feel margin pressure in its TV business,
Philips said. The operating loss of the television activities widened
to 95 million euros in the first quarter from 51 million a year ago.
Group net profit fell to 219 million
euros from 875 million a year ago, when it was boosted by a sale of
shares in Taiwanese chipmaker TSMC.