Philips Electronics Bids Farewell to Consumer Electronics Business

Philips Electronics Headquarters in Amsterdam, Netherlands | Wikipedia

Philips Electronics Headquarters in Amsterdam, The Netherlands | Wikipedia

After being in the consumer market for 80 years, Philips Electronics announced last Tuesday that it has sold off what remained of its consumer-oriented business. The Wall Street Journal reported that the buy-out is due to steeper net loss during the last quarter of 2012. It was weighed down by a restructuring charge and a fine for price fixing.

The company is said to be the supplier of LED flash modules for Apple’s iPhone over the years. Aside from that, Philips is primarily a medical equipment manufacturer.

Exclusive Partnership with Apple and Buy-Out by Funai Electric

Last year, Philips and Apple had an exclusive partnership to offer app-controlled “hue” light bulbs at the iPhone maker’s retail stores. Dubbed as the world’s “smartest LED bulb,” it lets users control their lights, including what color to display, using an iOS application.

Other than being a key component supplier and partner for Apple, the company has sold its consumer electronics division in an attempt to compete against the iPhone maker, Samsung, Sony, and many more.

However, that business has been a money loser for Philips, prompting them to sell their audio, video, multimedia, and accessories business. All of these were purchased by Japanese company Funai Electric for 150 million Euros and a brand-license fee.

On the other hand, Philips’ lighting division that manufactured the Hue light bulb will not be affected by the restructuring. As stated by Philips’ Chief Executive Frans van Houten:

Our consumer lifestyle business was margin dilutive to the group, so it was time to decide to move away from consumer electronics. Since we have an online entertainment, people do not buy Blu-ray and DVD players anymore.

Last year, Philips was one of the first companies to announce a series of Apple’s Lightning connector-compatible speaker docks and clock radios. But these types of consumer-oriented devices will now be handled by Funai.

What Lies Ahead for Philips Electronics

After taking the helm at Philips almost two years ago, Van Houten has focused his efforts into streamlining the company into leaner engineering business, as well as hospital scanners, light-emitting diode, and control systems.

Still, Philips pointed out that its fourth-quarter net loss was 358 million Euros. Thus, they’ve warned their investors about a slow start to their sales this year. In addition, Philips have warned investors that they would take a restructuring charge of 380 million Euros for its cost-saving program.

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