Once a leader in the television space, Dutch electronics giant Philips has revealed it is going to sell off its TV unit in a drive to become more profitable, it emerged this morning.
The company is moving its loss-making TV business to a 30/70 joint venture with Chinese monitor maker TPV and will retain the right to sell off its stake.
The move comes as a surprise for many because Philips is synonymous with the TV business. Philips created its first TV in 1928.
However, it has struggled to compete in the market against Far East players like Samsung and LG Electronics.
The TV unit, which accounts for less than 10pc of Philips group sales, employs 3,600 people who will now transfer to TPV. The unit has led to losses of US$1bn since 2007.
Selling off TV unit a top priority, says Philips CEO
“Finding a solution for our television business was our top priority and we strongly believe that the intended 30pc/70pc joint venture with TPV that was announced today will enable a return to profitability for the television business, and an increased portfolio focus for Philips in health and well-being,” CEO Frans van Houten said today.
“Philips has been active in the TV industry for many decades and the long-term strategic partnership with TPV shows our commitment to the continuity of Philips televisions for our consumers and trade partners.
“The joint venture leverages the innovation and brand strength of Philips with the scale and manufacturing strength of TPV. Philips will receive a deferred purchase price and brand licence income as part of the agreement. We expect certain costs in relation to the separation which will impact short-term earnings,” van Houten said.
For the first quarter, Philips reported a net income of €138m on sales of €5.3bn. Sales were up 6pc on last year.