Writedowns of more than €1 billion pushed Philips Electronics deep into the red in the fourth quarter, and it will cut 6,000 jobs to cope with a steep downturn that has hurt its consumer business.
But the Dutch company's shares rose by more than 5% on Monday as analysts praised it for being ahead of the curve with cost cuts and because Philips kept its dividend at last year's level of €0.70 a share.
Philips posted a net loss of €1.5 billion ($1.9 billion), its first quarterly loss since 2003 and missing even the most pessimistic estimate in a Reuters poll.
“The development of our quarterly results reflects the unprecedented speed and ferocity with which the economy softened in 2008,” Philips Chief Executive Gerard Kleisterlee said.
The company reported following a string of negative news from rivals, such as Japan's Sony, which warned it would post a record $2.9 billion annual operating loss, and Samsung Electronics posting its first quarterly loss ever.
It said it would accelerate its restructuring programs - which will include around 6,000 job cuts in 2009 - which are expected to deliver about €400 million in cost savings per year, starting in the second half of 2009.
The net loss included €1.3 billion in write-downs, mostly for its stakes in NXP Semiconductors and LG Display as well as its Lumileds acquisition, resulting in a full-year net loss of €186 million.
“We were expecting some bad news and I don't think this is worse than the market has been anticipating,” Petercam analyst Eric de Graaf said, adding that keeping the dividend stable was a major plus.
“They have been taking proactive initiatives in the past year and in this sense, management has been doing much better than some of its peers, such as Sony,” he added.
The world's biggest lighting maker, a top three hospital equipment maker and Europe's biggest consumer electronics producer has already been forced to admit that it will not meet its 2010 profit targets.
Philips said the effects of the “steep downturn” have led to value adjustments of its financial holdings as well as a sharp reduction in demand, especially in its consumer lifestyle unit, which makes TVs and MP3 players as well as electric razors and toothbrushes.
Philips also has halted its share buyback program until further notice.
“On the short-term we want to retain maximum flexibility ... We have liquidity to the tune of €6 billion and we want to use that liquidity primarily to catch the opportunities that certainly will present itself to further strengthen our market positions,” Kleisterlee told reporters. (Reuters)