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Philips cuts 6,000 jobs, halts buyback

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Philips cuts 6,000 jobs, halts buyback
cyrano Offline
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Philips cuts 6,000 jobs, halts buyback

Bloomberg

Amsterdam: Royal Philips Electronics NV, Europe's largest maker of televisions, will cut 6,000 jobs and stop buying back shares after reporting its first quarterly loss in almost six years.

Philips rose as much as 10 per cent in Amsterdam trading, the most in almost three months, as cash-flow generation and net debt in the fourth quarter were better than some analysts had anticipated. Philips, led by Chief Executive Officer Gerard Kleisterlee, will halt its 5 billion-euro (Dh23.65 billion) share buyback "until further notice" to preserve cash.

"Stopping the buyback is the right path," said Eric de Graaf, an Amsterdam-based analyst at Petercam, who has an "add" rating on the stock. "If you don't know what's going to happen in these difficult circumstances, it's better to preserve your cash."

Philips on Monday posted its first quarterly loss since the first quarter of 2003 as the economic slump hurt the value of stakes in LG Display Co and NXP BV. The planned firings come on top of the 3,000 jobs eliminated in the past quarter, spokesman Joon Knapen said.

Since announcing the buyback in December 2007, the Amsterdam-based company has repurchased 3.3 billion euros of shares, Knapen said. Philips yesterday gained as much as 1.26 euros, the biggest intraday increase since October 29. It rose 87 cents, or 6.9 per cent, to 13.47 euros at 10:25am in Amsterdam.

Before yesterday, the shares had dropped 51 per cent in the past year, compared with a 47 per cent slide for the benchmark Amsterdam Exchanges Index.

Cash flow was "strong" in the fourth quarter, Victor Bareno, an Amsterdam-based analyst at SNS Securities, wrote in an investors' note.

Net debt stood at 500 million euros at the end of the quarter, which was better than the 900 million euros Bareno had estimated.

The lighting unit, which has suffered from declining demand from carmakers and mobile-phone manufacturers, will be affected the most by the employment cuts, Kleisterlee said in a conference call with reporters yesterday.

Philips employed more than 121,000 people at the end of last year.
01-27-2009 05:52 PM
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