Royal Philips Forecasts Loss
Royal Philips Electronics, Europe’s largest consumer-electronics maker, said Tuesday that it posted a third-quarter loss and that it expects its first unprofitable year since 1996 as demand for semiconductors, computer screens and televisions sags.
The company forecast a 2001 loss of about $543 million before some expenses and plans to slash costs by $272 million, Chief Financial Officer Jan Hommen said. The company’s sales plunged 23% in the third quarter from a year earlier.
Some investors were encouraged that the company didn’t say its outlook has deteriorated further.
Sales at Philips and rivals such as Sony Corp. and Matsushita Electric Industrial Co. are being hurt as stagnating economic growth prompts consumers and businesses to delay purchases.
The third-quarter loss before one-time items was $411 million, compared with a profit of $700 million in the year-earlier period, the company said. Philips forecast a loss of $182 million to $227 million in the fourth quarter.
The units at Amsterdam-based Philips that make televisions, semiconductors and computer displays were all unprofitable on an operating level in the quarter, the company said. Those units accounted for about 55% of sales.
* Tellabs Inc., the biggest maker of equipment used to manage traffic on telephone networks, reported a third-quarter loss and said sales fell 45% as customers canceled orders. The loss was $49.5 million, or 12 cents a share, compared with profit of $187.3 million, or 45 cents, a year ago. Sales slid to $448.2 million from $812.1 million, the Illinois-based company said.
Phone companies are squeezing more voice and data traffic onto their existing networks, deflating demand for Tellabs’ gear. Chief Executive Dick Notebaert said in a conference call that sales will be in the range of the third quarter’s total for the next several periods. Unsure how much equipment customers such as Sprint Corp. will order, Tellabs declined to be more specific.
Operating expenses fell 13% in the third quarter from the second. The cost cuts, which included the elimination of about 1,000 jobs, have trimmed annual expenses by $190 million.
* RealNetworks Inc., maker of software for playing audio and video over the Internet, said its third-quarter loss narrowed because subscriptions rose. The company’s loss was $19.4 million, or 12 cents a share, on revenue of $45.2 million, compared with a loss of $30.8 million, or 20 cents a share, on revenue of $67.1 million a year earlier. Analysts polled by Thomson Financial/First Call on average expected sales of $44.7 million.
The Seattle-based company’s sales for advertising and server software, which is used to distribute media files over the Internet, have fallen as the economy has slowed and Internet clients have gone out of business. The company is trying to gain more sales in Internet games and consumer subscriptions to view sports events and listen to music online.
