Jan. 29 - Philips is getting out of the shrinking home entertainment sector, after agreeing to sell its audio and video business to Japan's Funai Electric Co for 150 million euros. The Dutch group's CEO Frans van Houten says they will focus on their more profitable home appliances and healthcare operations. Joel Flynn reports
It's survived decades of change and the Second World War. But finally technology has caught up with Philips. Best known for its television and audio equipment, the Dutch group has now agreed to sell its home entertainment business to Japan's Funai Electric Co. Frans van Houten is Philips' CEO. SOUNDBITE: Philips CEO Frans van Houten, saying (English): "Audio-video entertainment is one of the heritages of Philips, it's always a difficult decision to transform one's portfolio, but we are happy that we have been able to make this step. Last year we transferred our television activities into a joint-venture, and now with the deal with Funai, we effectively complete our repositioning away from consumer electronics, allowing us to focus on innovation for healthcare and making the world more sustainable." Philips has struggled to compete with lower-cost Asian makers of consumer electronics. The sale of its audio and video operations follows last year's joint-venture with Hong Kong-based TPV for its troubled television business. The company now wants to focus on its more profitable home appliance and healthcare operations. But this repositioning presents some challenges. SOUNDBITE: Philips CEO Frans van Houten, saying (English): "We did say that the sales will start slow, has everything to do with the uncertainty in the United States with regard to debt ceiling and fiscal cliff, which make hospitals quite prudent with their orders. Of course, Europe continues to be in recessionary territory, but we were proud to show a very good order intake for healthcare in the fourth quarter. So it is a mixed picture." Philips is facing a 509 million euro fine from the EU for anti-competitive practices. It plans to appeal. The company made a fourth-quarter net loss of 355 million euros, but those figures actually showed underlying profit improved significantly. Analysts welcomed the news - its shares rose around 1.7%. Philips won't be disappearing any time soon. But in the future you may see its products more in hospitals than in your home.