Financial Accounting Blog

Tuesday, February 10, 2004

Wall Street Journal, Feb, 2004 Phillips post profit after two years of losses
Phillips cost cutting allowed them to turn a profit in 2003 after two years of losses. Over the last three years they trimmed their workforce from 219,000 to 166,000.
While this allowed them to turn a profit, the predictability of future earnings are in question. Poor brand equity in the USA continues to limit their selling price and hurts their gross margins. The USA division has until 2004 to become profitable or risk being shut down. This division with over 400 hundred million in sales lost over 85 million euros in 2003. A marked improvement but a long way to go in a short period.