Sunday, June 24, 2007

Philips Electronics profile Dutch-based Philips Electronics recently announced it would buy US-based Color Kinetics in an $800 million deal. The US company specializes in lighting systems based on LED (light-emitting diode) technology. LED lighting is less expensive to run than other lighting technologies, and it is extremely durable, require very low maintenance. In buying Color Kinetics, Philips gains some important patents in this fast-growing field, one in which it is currently competing. In fact, according to a Wall Street Journal story ("Philips Pact Expands Its Lighting Business", 6/20/07), "Philips and Color Kinetics have been competing against one another for a contract to install the latest in computer-generated LEDs, capable of producing millions of colors and light patterns, to illuminate the outside of the Empire State Building in New York City." Philips' game of gin rummy The move is part of a strategy of shoring up the Philips core businesses while sloughing off non-core assets. Philips has been extremely active in acquisitions and deacquistions of the last few years, as it reshapes itself into a far more focused company, with related concentration in four areas: lighting, consumer electronics, healthcare electronics, and home and personal care electronics. Lighting Philips is the world's #1 seller of light bulbs and a leader in lighting systems, competing with two other giants, General Electric and Osram (Siemens). It has been a leader in selling flour4escent bulbs and is also a leader in LED lighting. Lighting accounts for some 20% of its business, and Philips has been snatching up smaller innovators and market leaders like Color Kinetics. In 2007, Philips acquired: Canadian company TIP Systems, a company working with Solid State Lighting (SSL) technology. Partners in Lighting International, a major European maker of home lighting devices. In 2006, it acquired; US-based The Bodine Company, a manufacturer of emergency lighting equipment Lumileds Lighting International B.V, a Dutch manufacturer of LED lighting. Consumer electronics Philips is one of the few non-Asian makers of televisions, home theaters, MP3 players, camcorders, audio systems, and DVD players. It makes computer audio and video systems, storage systems and media. It makes cordless and Internet phones. Most important, it holds significant patents, collecting revenue form other companies' device sales. In 2007, it acquired US-based Digital Lifestyle Outfitters, which sells accessories for consumer electronics, including docking stations, FM transmitters, cables and cases. In 2006, it bought from US-based Fiskars its Power Sentry division, a major player in surge protection equipment Healthcare Philips is a major player in virtually all kinds of major equipment used in hospitals and medial centers, and is growing fats in IT systems to support them. Again, it competes with General Electric and Siemens. It is a major player in radiography, MRI, PET, fluoroscopy, ultrasound and other imaging equipment. It is also big in patient monitoring equipment in such areas as EKG, blood pressure, pulse measuring, ventilation systems, and so on. It is also a major maker of defibrillators. In 2006, Philip acquired Witt Biomedical Corporation, the a supplier of hemodynamic monitoring systems used in cardiology catheterization laboratories US-based Intermagnetics, a maker of MRI components and accessories In 2005, it bought Stentor, a provider of radiology picture archiving and communication systems Home and personal care With its Norelco and Philips electric shaver brands, Philips is #1 in the world. Its Sonicare electric toothbrush is a leader in its category. Philips also makes baby monitors home defibrillators, and a leading European coffee maker, as well as juicers, food processors, and blenders In 2007, Philips bought US-based Health Watch, a maker of personal emergency response devices and services. In 2006, it bought: Lifeline, a US-based maker of personal emergency response systems AVENT, a leading provider of baby and infant feeding products (bottles, warmers, breast pumps) Discards At the same time Philips has been working quickly to sell off all kinds of less central business units. The result has been a major simplification of a once confusing portfolio. We might trace it back to the sell-off of Polygram records in 1998, a move that got the company (good timing!) out of the recording business. In 2007, Philips sold its Power Solutions business, which makes power supplies for consumer electronics, to Spain's Bobinados de Transformadores, S.L. its last mobile phones business, to China Electronics Corporation its Optical Media & Technology (OM&T) division, which makes components for DVD readers, to Moser Baer India In 2006, it sold: Philips Automotive CD and DVD business to Taiwan's Lite-On IT Corporation 25% interest in US-based FEI Company, a maker of electronic microscopes. ts optical pick-up business (used in DVD players) to Taiwan's Arima Devices. its Contract Manufacturing Services, maker of wireless equipment, to French company Attel its holdings in Anteryon B.V., a maker of lenses, fiber networks, and other optical equipment its 37% holdings in NAVTEQ, which makes automobile navigation (GPS) systems Philips High Tech Plastics Tooling to Dutch Varova BV In 2005, it sold: Philips Aerospace to Italy's Avio Group its High Tech Plastics (HTP) Automotive to Helvoet Holding, a Dutch plastics and rubber company. its Philips' Mobile Display Systems company into a joint venture with Taiwan's Toppoly.   One key move was the 2006 sale of its semiconductor division, which makes chips for phones, TVs, MP3 players, and autos, among other devices. The division had been losing market share to more agile competitors.  It was bought by US equity groups Silver Lake, KKR, and Dutch equity group AlpInvest Partners NV, in a deal worth more than $10 billion. The question now is whether and, more specifically, when Philips will also sells its 33% interest in LG Philips LCD, a maker of thin-panel LCDs, a joint venture with Korean LG Electronics. is also a partner with LG Electronics in LG Philips Displays, the leading maker of cathode ray tubes (CRT), a rapidly fading market. The value of the sell-offs is far gretaer than that of the buys so far, and Philips has repurchased some stock. But it also has cash to make more strategic buys. 8:56:14 PM

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