Excluding one-time gains, net income for the first quarter was at 53 million euros. Philips sees no signs that the economic slowdown, particularly in the U.S., is near its end, the company said in a statement. Philips expects the continuing malaise to cause low growth and high price erosion for some of the markets it is active in. As a result, net income in the second quarter before special charges is likely to be negative, Philips said. Because of the negative sentiment, Philips said it has cut back capital expenditures to 2.5 billion euros, from a planned figure of 3.5 billion euros for 2001.
Further reduction is possible, if needed.
Also, as a cost cutting measure, Philips said it will layoff between 6,000 and 7,000 people. The company plans to take a one-off restructuring charge of 350 million euros in the second quarter. With a loss of about 400 million euros in the second quarter it will be tough for Philips to turn a profit for the full year. Earlier, Daalder said, the consensus forecast for the year was at between 1.40 and 1.50 euros in earnings per share. Details on the restructuring will be presented during the course of the second quarter, particularly considering the activities in Sunnyvale, Calif., Components and Amsterdam Consumer Electronics, Philips said.