Frans van Houten in Amsterdam on Monday. (AFP)
Amsterdam, April 18 (Reuters): Philips is hiving off its once leading television business, the first step by new chief executive Frans van Houten to boost flagging profit at Europes biggest consumer electronics maker.
Philips is moving its loss-making television business to a 30/70 joint venture with Hong-Kong-based monitor maker TPV and has the option to sell out. The Dutch group has struggled to compete against players such as Samsung and LG Electronics.
Van Houten, a restructuring expert who took over as CEO this month, said on Monday he was assessing the profitability of Philips 400 or so business areas, a hint that further divestments could be on the cards.
We are not yet firing on all cylinders...Theres much unlocked potential in Philips, Van Houten said.
Philips shares opened lower on the news, but then recovered to trade up 0.9 per cent at 0929 GMT.
Philips has 3,600 employees at the business, all of whom will be transferred to TPV.
It did not give a value for the deal, saying it would receive a deferred payment from TPV.
Philips showed its first television to the Dutch public in 1928 a bulky box-like contraption that was a far cry from its current sleek, flatscreen models.
But Philips, once a global leader in TV sets, can no longer compete with lower-cost rivals.
The unit, which makes up less than 10 per cent of group sales, has become a thorn in the firms side, having notched up losses of almost a billion euros since the beginning of 2007.
Van Houten said the joint venture will enable a return to profitability for the television business, and an increased portfolio focus for Philips in health and well-being.
Philips, which is also the worlds biggest lighting maker and a top three hospital equipment maker, reported first-quarter earnings on Monday which fell short of expectations, a reflection of weak consumer sentiment.
It competes with General Electric and Siemens in the hospital and lighting markets.