Philips loss to be followed by 4,000 job cuts

Europe's largest consumer electronics firm posts a massive loss, and announces plan to cut a further 2 percent of its workforce
Written by Graeme Wearden, Contributor

Shares in Philips fell almost three percent in Tuesday morning trading after the Dutch semiconductor and consumer electronics manufacturer declared a loss of £470m for the second quarter of this year. The company said it would cut 4,000 jobs bringing the total figure for the year to date to over 10,000 -- five percent of its workforce -- but did not say where the latest cuts would be.

The company also warned that it might make a loss for this financial year, although it was hoping to break even. Sales in the last three months fell to £4.68bn, compared with £5.58bn for the same period a year ago. The £470m loss, after tax, compares to a profit of £2.2bn in the second quarter of 2000.

The loss was blamed on a general decline in the technology sector. In a statement, Philips warned that the downturn in the semiconductor, telecoms and PC sectors had worsened and spread to all the major economic areas. It added that the semiconductor market would not improve until 2002. Philips has already been hit by the troubles in the mobile sector, and decided earlier this year to stop making mobile handsets.

Although Philips was expected to record a loss, the suggestion that the US slowdown had spread worldwide worried investors. Technology stocks opened lower on the London stock exchange, with telecoms companies and semiconducter manufacturers badly hit.

Analysts were not surprised that Philips had a cautious approach to the future, given recent economic problems. However, they did predict that the stock market could be in for another difficult day.

Shares in Baltimore Technologies have fallen 14 percent since it said it was not in takeover discussions with Computer Associates or rival security firm Chantilley.

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