Philips dissolves Components division

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Philips dissolves Components division

Philips Electronics is to shut its California-based components division. Most of the activities will be moved to other Philips units, while some smaller parts will be sold off.

A new home has been found for Philips Components' telecom speaker and mobile display business, which will become part of Philips Semiconductors. Other digital display and wireless connectivity activities, including the digital remote control unit, will move to Philips Consumer Electronics.

Uncertainty remains about Philips Optical Storage, which makes DVD+RW drives, among other storage products, and has been hit hard by the slump in PC sales. Philips will present a final plan for the restructuring of this part of Philips Components in eight weeks, the company said.

Philips Optical Storage, at least for now, will not become part of another business unit; it will appear in the miscellaneous section of Philips' financial report from the first quarter of 2003. A new group focused on emerging display technologies, such as liquid crystal on silicon (LCoS) will also be kept separate, Philips said.

Philips is also looking to either sell off or form partnerships to manage the parts of Philips Components that focus on mature technologies such as speakers and analogue remote controls, a spokesman said. These parts of Philips Components account for about €400m (£251m) in annual sales, he said.

Philips Components, which employs about 13,000 people worldwide, has been struggling as a result of the slump in sales of mobile phones and computers, two of its key markets. Income from operations at the division fell from a €608m profit in 2000 to a €667m loss in 2001. Sales plunged 45% to €2.77bn in 2001 compared to 2000.

Philips Components' headquarters in California will be closed and Matt Medeiros, the division's chief executive, will leave the company. Medeiros is unable to relocate, according to Philips.

Philips plans to take a €175 million charge related to the dissolving of Philips Components in its fourth quarter. The company plans to have carried out the measures by 1 January 2003.

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