Well, it’s official. Philips Electronics, the last European electronics manufacturer, is selling its TV business to a Chinese contract electronics manufacturer.
This would be bigger news if the Chinese company, TPV Technology, hadn’t already been making Philips’ branded TVs for the past seven years.
Back in 2005 Philips sold its computer-monitor manufacturing operations and a portion of its flat screen TV business to Hong Kong-based TPV Technology for some $2 billion. So there hasn’t been any European-made television sets for a while now. When Frans van Houten took over as CEO of Philips in April, his first order of business was to get rid of the TV division. That same month he announced plans to set up a joint venture between Philips and TPV to transfer ownership. TPV shareholders unanimously gave their approval on Tuesday, and the European Commission okayed the â‚¬353 million deal today.
Philips’ TV division has been hemorrhaging money for years; it just can’t compete with Asian manufacturers and makes a lot more money selling light bulbs and electric toothbrushes. (Just kidding, Philips’ most lucrative business segment is medical equipment). An article in Reuters notes that its TV business has lost almost â‚¬1 billion since 2007. In 2011 it sold â‚¬2.7 billion worth of TVs, down from â‚¬3.1 billion in 2010, but spent â‚¬2.9 billion making the darn things.
Philips published its 2011 Annual Report yesterday, and the company suffered a net loss of â‚¬1.3 billion on sales of â‚¬22.5 billion, even after writing off the TV business as a part of its discontinued operations (which it referred to as an “onerous contract.”)
Consequently, this is a good move for TPV Technology, which saw its sales grow 44% in 2010 to $11.6 billion (its 2011 figures aren’t out yet, and unlike Philips, the company publishes revenues in US dollars). Having control of the Philips brand brings a lot more name recognition than its own brand, AOC, which is marketed in the US but not exactly popular. Along with its other joint ventures, including making components with LG Display, TPV seems to have the know-how to churn out low-cost electronics. So I expect its business to grow accordingly.