Philips announced it would take impairment and restructuring charges of about U.S. $956 million for its holding in a displays joint venture with LG Electronics. The charges follow the announcement the LG.Philips Displays joint venture would close two factories in Germany and Britain, seeking to cut costs due to shrinking markets and eroding prices for Cathode Ray Tube (CRT) monitors.
The revised expectations and plant closures will force LG.Philips Displays to take an impairment charge of $653 million and restructuring charges of $72 million, Philips said.
"This is a business based on a technology that will be replaced by flat LCD displays. As LCD takes market share we are seeing overcapacity on the CRT market," said Jan Hommen, Philips' chief financial officer.
Mr. Hommen said he expected the LCD monitors to dominate the display market in 8 to 10 years and confirmed a positive outlook for the fourth quarter, saying it would be in line with the previous quarter when the company had a net profit of $150 million.
Philips and LG Electronics have already made their bet on the growing market for flat screens, setting up LG.Philips LCD. The 50:50 joint venture is the leading maker of LCD panels sized over 12-in with a 21.5-percent market share. Expecting televisions as thin as a picture frame to be as successful as flat computer screens, LG.Philips LCD in November doubled its spending plan to $5 billion. (Reuters)
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