Investopedia: Philips Needs A Shake Up

Although Dutch conglomerate Philips (NYSE:PHG) has bounced off the late 2008/early 2009 bottom in the stock, it has been many years since Philips was really a credible candidate for a long-term investor. Once an unquestioned leader in lighting and a strong competitor in consumer electronics, Philips has fallen victim to the bloat and malaise that seems to affect almost every conglomerate sooner or later. The question for investors now, though, is how long they are willing to wait for real signs of a new way of doing business at this company.



Weak Guidance Hamstrings the Stock
Philips surprised the market by preannouncing a disappointing second quarter. Management was sparse on details, but sales in the core lighting business only grew in the low single digits, while sales in consumer electronics have fallen from last year's level on weakness in Europe and a restructuring of the TV business.

Oddly, the company said nothing about the health care business, which is a substantial factor in sales and profits. That said, based on the performance at competitors like General Electric (NYSE:GE), Siemens (NYSE:SI), Varian (NYSE:VAR), Hologic (Nasdaq:HOLX) and ZOLL (Nasdaq:ZOLL), it would seem credible that Philips had a good, but probably not spectacular, quarter.

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