Philips Q1 profit plunges, missing expectations

Dutch electronics giant Philips revealed Monday that first-quarter net profit plunged 31.3 percent and announced a joint venture with Hong Kong-based TPV for its flagging television business. Net income declined to 138 million euros ($198 million), which was lower than forecast by analysts who spoke earlier to Dow Jones Newswires. "Finding a solution for our television business was top priority and we strongly believe that the intended 30 percent/70 percent joint venture with TPV that was announced today will enable a return to profitability for the television business," CEO Frans van Houten said. The joint venture would be operational by the end of the year, a statement said, adding that Philips would hold a 30 percent stake. Television sets produced can bear the Philips brand name for at least five years, and the company will receive royalties. Van Houten warned of a tough year ahead, saying: "We expect headwinds in 2011 due to the Japan tragedy, impacting our revenue and supply chain." Philips, a manufacturer of medical equipment, televisions and lighting systems, employs about 119,000 people in more than 60 countries. In January the electronics giant reported a more than three-fold rise in net overall income for 2010 due to increased emerging market sales. Net profit for the year was 1.45 billion euros ($1.96 billion), up from 410 million euros in 2009. However Philips warned then that consumer sentiment in mature markets remains subdued, pointing in particular to the television market.