Slumping TV Sales Damp Philips 1Q Profit

Sagging TV sales, especially in the United States, dragged down first-quarter profits, as Royal Philips Electronics NV reported net income of $347 million, nearly 20 percent lower than the $433 million analysts had forecast.

Net profit was $1.386 billion in the same period last year a quarter boosted by receiving $1.161 billion for part of its stake in Taiwan Semiconductor Manufacturing Co. Ltd.

Chief Financial Officer Pierre-Jean Sivignon said there was stiff competition in the TV market.

"The U.S. remains the black spot, but when we look at the quarter it was tough all across," he said in a conference call.

Philips last week announced that it would license Funai Electric Co. Ltd. of Japan to market the Philips and Magnavox brands in the U.S. and Canada for five years.

Philips is taking a charge of $198 million to cover the cost of the transfer and other steps to make its global supply base more efficient and focus its TV business on the strongest markets, especially in Europe and some developing countries.

But in Europe, where the Philips brand is much stronger than in North America, the company also lost money on TV sales and is unlikely to show a profit for the rest of the year, Sivignon said.

Sivignon said Philips had no immediate plan to license its brands in Europe but was keeping its options open. For the time being, it is focusing on cost efficiencies for TVs a product it has been developing since 1925.

This quarter included a gain of $131 million for the partial sale of LG Display, Philips said.