Philips back in the black

AMSTERDAM, Netherlands -- Philips Electronics moved back into the black in the first quarter of 2002 after last year's record losses.

Philips, Europe's biggest consumer electronics company, said the "worst slump" in its recent history was behind it and now expects the semiconductor and components markets to recover.

Net income for the first three months of March 31 was 9 million euros ($7.9 million), or 0.01 cents per share. That compares to a profit of 93 million euros, or 0.07 cents a share, in the same period a year ago.

The Dutch company posted its largest full-year loss since 1996 in February. Philips said then it made a loss of 2.6 billion euros in 2001, and a fourth-quarter loss of 1.4 billion euros as demand for chips and televisions slumped.

Europe's top lighting maker and number three in semiconductors, said higher margins and improved results from unconsolidated companies helped push it back into the black. Sales declined more than 7 percent to 7.6 billion euros.

Analysts had expected the company to make a loss of about 207 million euros in the first quarter of 2002 on revenues of 7.7 billion euros.

Sales at Philips' most closely watched Semiconductor unit grew 7 percent compared from the fourth quarter of 2001, boosted by stronger demand for standard analogue chips that go into consumer electronics and for chips that go into displays.

The chip sector in 2001 suffered the worst slump in its history, amid chronic overcapacity and falling demand. Many industry participants expect the gloom to ease in 2002, after moves by several chipmakers in recent weeks to raise contract prices.

"Its seems the worst slump in recent business history is behind us now, and the we begin to see the start of a new upturn in the business cycle," Philips Chief Executive Gerard Kleisterlee said. "We are encouraged by the improved performance in many of our businesses, especially in semiconductors and components."

A U.S.-led economic slowdown, worldwide job losses and excess supply of chips and other goods has caused many problems for Philips. The company is cutting more than 12,000 jobs and its restructuring plan could save 1 billion euros annually.

Philips said it had booked a gain of 67 million euros from the sale of shares in chip equipment maker ASML. Philips previously said its stake in ASML, which was originally spun off from the Dutch conglomerate, was no longer core to its

business. It now owns 5.8 percent of the equipment maker.