The decision means that Philips has decided to take a $258 million charge for restructuring costs.
Philips took the decision after taking a strategic review of its mobile handset business and finding that the mobile subsidiaries, which currently hold approximately 6% market share in the GSM phones and have been struggling to break even for sometime are unlikely to offer satisfactory returns.
In Amsterdam the financial markets responded by a fall of some 3% in the company’s value.
Philips will continue to sell through its own customer sales and distribution channels Philips branded products from the joint venture with CEC, whilst realigning its research and development resources.
Mr Gerard Kleisterlee, president and CEO of Royal Philips Electronics, commented in a press statement: Philips is a major provider of innovative wireless technologies to the mobile handset makers through our Semiconductor and Components activities. While focusing on our role as a technology provider we will continue to pursue the opportunity to sell Philips branded handsets through our sales and distribution channels where this has added value. We are confident that the arrangement with CEC will allow us to do so and will give our customers a renewed trust in the continuity of our business. By reducing the cost base drastically we will be able to realize market presence with greatly reduced exposure.
