Philips Electronics NV yesterday announced it will bring forward its restructuring program, rather than wait for the arrival of the new chairman Cor Boonstra, due in October. The Eindhoven, Holland-based firm also said it is to scale back investment in semiconductors until market conditions show signs of improvement. The firm had planned to invest the equivalent of $1,160m in semiconductor factories this year, but has now revised its figures to about $745m. The shock news came as Philips turned in an unexpected second quarter net loss at $264.5m, from profits of $338m before. Analysts had forecast profits for the second quarter to be in the range of $208.8m to $269.7m. Figures include a $464m extraordinary pre-tax restructuring charge that was partly off-set by a small gain from the sale of part of Philips’ stake in ASM Lithography NV, which brought the net charge to $440.8m. The majority of the company’s problems stem from its troubled Sound & Vision business, which looks set to lose about 6,000, or 15% of its workforce as part of the restructure. No indication was given as to where the axe will fall. Further announcement will be made after the relevant staff have been informed, but the company said it intended to impliment changes within the shortest possible time frame and certainly before the end of the year. Outsourcing is to be a key feature of the restructuring program. Philips suggested it would outsource work to lower cost countries in Europe and Asia, but no details were available. New products feature in the restructuring plan, and Philips said it intended both to globalize and standardize the business to bring it back into line, with the eventual aim of being able to anticipate the changing pattern of consumer spending and the market forces that affect such decisions; conversion at $0.58 to the Dutch guilder.
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