Bloomberg News

Philips Retreat From TV Drags Out as TPV Talks Continue

October 17, 2011

(Updates with CEO comments from second paragraph.)

Oct. 17 (Bloomberg) -- Royal Philips Electronics NV said it may be forced to review alternatives for its television subsidiary as negotiations to sell a majority to Hong Kong-based TPV Technology Ltd. drag out

Philips, based in Amsterdam, planned to shift the subsidiary to TPV by the end of the year. Maintaining that schedule has become more challenging as the overall market for consumer electronics suffers, Chief Executive Officer Frans van Houten said on a conference call, as Philips reported earnings.

While Philips isn’t “miles apart’ with TPV, negotiations continue to be ‘‘intense,’’ Van Houten said. The CEO, who engineered the deal shortly after taking over in April, said he remains in favor of the TPV partnership remains, and he declined to say which alternatives Philips is considering.

Philips is ceding control of its 80-year-old television unit after four years of losses at the subsidiary, shrinking a consumer-electronics business that’s struggled to stem rising competition and lower costs from Asian rivals. The television business lost 54 million euros ($75 million) in the third quarter, Philips said today.

Van Houten had made fixing the TV-division, which employed about 3,600 people at the end of the third quarter, a priority, after his predecessor Gerard Kleisterlee struggled to turn it around for a decade. Philips will retain a 30 percent stake in the partnership and receive royalties of at least 50 million euros annually starting in 2013, according to the accord when the deal was announced in April.

‘‘We think it is essential that Philips closes the deal, but these remarks and longer negotiations suggest the exit will come at higher cost,’’ Victor Bareno, an analyst at SNS Securities, said in a note to investors today.

Philips is among the last remaining mass-market producers of televisions in Europe, a niche now only occupied by luxury manufacturers including Loewe AG of Germany and Bang & Olufsen AS from Denmark. Siemens AG and Nokia Oyj, the world’s largest maker of mobile phones, made televisions before giving up production to narrow their focus.

--Editors: Benedikt Kammel, Tom Lavell

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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