Print 23 comment(s) - last by Believer.. on Apr 19 at 4:07 PM

Cedes control of loss-making TV unit to Hong Kong computer monitor manufacturer

Philips, once a leader in the market, is turning down the dial on its losing television business according to Reuters and Bloomberg.

Frans van Houten, a "restructuring expert" and newly appointed CEO of the Amsterdam-based company, has implemented a plan to hand over control of the Philips' TV business to TPV, a Hong Kong-based monitor maker that controls 33 percent of the global computer monitor market. The joint venture grants TPV control of the business, with a 70-percent ownership stake. Philips will claim the remainder, but it has the option to sell out. According to Bloomberg, it will receive royalty payments from TPV of at least $72 million annually starting in 2013.

The deal is an effort to boost the Dutch company profits. Philips lost 87 million euros in the first quarter from its TVs, which it first manufactured in 1928.

The value of the deal has not been disclosed, but all 3,600 Philips employees who currently work in the TV business will be transferred to Hong Kong. 

This is not the first time Philips has done business with TPV. According to Bloomberg, it sold a majority stake in PC monitors to TPV for $358 million in 2004. \

And the deal accelerates Philips' focus on a few key industries: lighting, health-care products, and smaller consumer electronics such as toothbrushes and electric shavers. 

Analysts and markets warmed to the joint venture. Philips stock rose 2.6 percent -- the most since January. "It's a major positive," ING analyst Sjoerd Ummels told Reuters. "It's clear (Van Houten) will address laggard businesses."

"It is a positive surprise Frans van Houten has fixed this problem so fast," Theodoor Gilissen Bankiers Analyst Jos Versteeg told Bloomberg. "Van Houten certainly isn’t wasting any time."

The announcement came the same day that the company also reported its first-quarter earnings. Net income was down from 200 million euros last year to 137 million in Q1 2011. 

Philips was one of the last surviving mass-market European television manufacturers -- a niche now dominated by Germany's Loewe AG and Denmark's Bang & Olufsen AS. Philips, though, struggled to compete with Asian manufacturers such as Samsung and LG Electronics.

"We are not yet firing on all cylinders...There's much unlocked potential in Philips," Van Houten told Reuters, hinting that there may be further divestments in the future.

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RE: Well there you go
By Ihmemies on 4/18/2011 11:06:31 AM , Rating: 1
Probably because they don't look good and aren't that good in general either. No wonder people don't want to buy them :P

RE: Well there you go
By Motoman on 4/18/2011 11:30:16 AM , Rating: 5
...they may not have been sold under the Philips name.

There's only so many actual manufacturing facilities for such devices in the world - far fewer than the number of brand names in play.

For example, that Hong Kong company they're selling their operation to - they control 33% of the global computer monitor market. 1 in 3. However, you've never heard of them - because that's not the name on the box.

The vast majority of such devices are not made by the company selling it. Same goes for laptops (big-name OEM laptops are made by a handful of companies in asia) and car tires. And I'm sure other people will come up with other products...

...which is why it's stupid to apply too much value to the brand name on the box. Aside from the truly huge producers, like Samsung, Sony, and have little to no clue where that device was built, and by whom. By the same token, a Brand X TV might have rolled off the same production line as a high-end Samsung TV and be virtually the same device for a lot less money. Brand names mean close to nothing these days...

RE: Well there you go
By kleinma on 4/18/2011 12:40:11 PM , Rating: 3
I took apart a Sony Vaio laptop because of a bad screen, and turns out the LCD was made by LG.. guess sony gets a better deal using someone elses technology instead of their own...

RE: Well there you go
By Solandri on 4/18/2011 2:24:46 PM , Rating: 3
The vast majority of laptop LCDs are made by Samsung, LG, CMO (Chi Mei Optoelectronics), and AU Optronics. The latter two own most of the low-end panel business, so they show up even in Samsung and LG products.

Sony in particular uses their own panels (actually manufactured at a plant co-owned and co-operated with Samsung) only in their high-end laptops and TVs.

RE: Well there you go
By Scootie on 4/18/2011 3:19:34 PM , Rating: 2
Im not sure what do you mean by Sony using their own panels in high-end products but recently I had to disassemble a Sony laptop worth of ~1500 euro or maybe a little more and it had an AU Optronics panel and hynix rams(the later are counted as cheap/not the fastest memories where I work) in it. If that 1500 euros is not high-end laptop I dont know what is then. :)

RE: Well there you go
By smartalco on 4/18/2011 5:28:27 PM , Rating: 2
By 'high end' he meant their multi-thousand dollar (or euro) Bravia TVs. I don't think Sony makes much of anything in the Vaio line except the frame/case and maybe the motherboard (more likely contracted).

RE: Well there you go
By Dorkyman on 4/18/2011 2:22:34 PM , Rating: 2
There's nothing new about a vendor picking parts made by other vendors. I recall that for many years, Rolls-Royce cars used GM engines and transmissions, simply because those items were the best around for their intended purpose.

Brand name sometimes counts for something if it means that if something goes wrong then their service organization deals with it. Or, a name-brand company gets the cream of the crop from the assembly line. Buy any ram lately? The no-name boards are cheap for a reason, even though the chips themselves may have come from the same factory as the name-brand product.

RE: Well there you go
By Bubbacub on 4/19/2011 2:31:58 PM , Rating: 2
"GM engines and transmissions, simply because those items were the best around for their intended purpose"


can't think of a time in the last 20-30 years when GM had the best engines and transmissions in the world.

i guess the qualification comes with the "intended purposes bit" since rolls royce and bentley (and aston martin's till recently) have been practising getting a shedload of cheap and wrapping them up in leather and a few tree's worth of shiny wood panelling.

RE: Well there you go
By PokerFace on 4/18/2011 11:59:52 AM , Rating: 4
Err wot? Philips made some of the nicest looking and most advanced TV's around. Atleast there high-end stuff. They also had innovative features like Ambilight:

Where the TV has lights on the sides that change colour according to what is being displayed. It worked really well too and made viewing more easy on the eyes. They were also one of the first to have good picture processing enhancements like Pixel Plus. Even there TV remotes were sexy and they built things well. Many of there TV's won awards.

Sad to see them stop making TV's, as usual the cheap and non-innovative asian junk wins out because of people like you.

RE: Well there you go
By jub on 4/18/2011 12:14:04 PM , Rating: 4

the last time i was searching the market for a LCD, Philips had the best looking and best image quality. its 7 and 9 series were amazing compared with a Samsung or LG. Only Sony had similar LCD back then. this was around 2009 here in southern europe.

problem was: PRICE
Philips just couldn't compete with Samsung or LG in price

my choice turned out to be a Samsung.
another sell for Asia.

RE: Well there you go
By RMSe17 on 4/18/2011 1:07:32 PM , Rating: 2
I got a 42" 120Hz Philips LCD TV, and I love it.

"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad
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