Shares in Philips Electronics NV slipped 7% to the equivalent of $31.88 gilders at the start of trading yesterday as the group announced a disastrous third quarter; later in the day they clawed back some of the losses. Analysts had predicted profits to be somewhere in the region of $144m to $217m, but Philips the final figures were far worse than expected. Net profits for the period to September 30 were down by 77% to just $74m on revenue that edged up 4% to $9.62bn. Following initial confusion as to why the group turned in such a disappointing performance so late in the fiscal, shares later rallied to $34.65, $0.60 up from the start of trading. Philips took solace in the recovery, but declined to give a full 1996 profit forecast. Philips also said it would take a further $601.5m gross restructuring charge in the current fourth quarter, on top of an earlier $481.2m charge to restructure its Sound & Vision unit announced in July, where 6,000 jobs are expected to go. The news came hot on the heals of Wednesday’s announcement from the group’s 75%-owned music and movies unit PolyGram NV announced a $90m restructuring charge. At a press conference yesterday, finance director Dudley Eustace declined to put a figure on the latest round of job cuts, but said it was fair to assume more would be lost than gained in Western Europe as operations are relocated to areas offering lower labor costs. Both Europe and North America reported dismal sales and operating profits fell by 80% t o $165m and 90% to $20m respectively. Most notable for its lack of performance during the period was the Consumer division, where an operating loss of $6m was reported, from profits of $173m last time. The Professional Products and systems division turned in increased losses for the nine months at $47.5m on revenue that remained flat at $4,842. Operating profits from Software & Services slumped 39% to $175m on revenue that rose by 21% to $4.97bn. Over at components and semiconductors, operating profits were down 30% At $716m on revenue that edged up 10% to $7.04bn. Eustace said no sector would be spared from the restructuring efforts, the bulk of which should be completed by the end of next year. Those businesses that are losing money or not making the grade will be either sold or closed down depending on what the market may be prepared to pay. Philips said it would continue to pay a dividend at the full year. The figures are converted at $0.6015 to the Dutch gilder.
