Philips (NYSE:PHG) just reported what looks like a breakthrough year, in which the electronics giant slimmed down to a leaner, meaner shape. Despite price pressures on popular product lines like flat-screen TVs, gross margins improved on the back of strong results in medical systems. And management posted a strong vote of confidence in the business with the largest dividend increase since ... well, ever. The new annual payout is 0.60 Euro per share (or ADR -- it's a 1:1 ratio), up from 0.44 Euro in 2005.

It's not a one-time special dividend, but a boost to the regularly scheduled payments going forward. For 2007, Philips management expects to support this payout with solid growth, as the company has "a number of exciting new products" in the wings, and intends to simplify the company even further. In 2006, the semiconductor division was sold to a group of private investors.

Asset management efforts will help, too. Philips holds significant ownership stakes in JDS Uniphase (NASDAQ:JDSU), TPV Technology, Taiwan Semiconductor (NYSE:TSM), and of course LG.Philips LCD (NYSE:LPL), worth more than $12 billion altogether. Some of these stakes are up for reduction this year, unlocking capital to fuel strategic acquisitions, share buyback programs, and that dividend payout.

Philips' stated 2007 agenda also includes better relationships with both customers and employees. One goal is to make Philips "an exciting place to work"; another project will introduce Net Promoter Scores as a real business metric. Happy employees work harder, and happy customers will do your marketing for free.

That's the thinking, and other than the somewhat nebulous "exciting place to work" line, it sounds about right to me. You could pick a worse customer relationship model to emulate than Costco's (NASDAQ:COST), after all. Philips isn't quite done restructuring itself yet, as it unloads underperforming segments like the cell phone business while casting bedroom eyes at attractive medical systems and consumer electronics opportunities. This once-sleepy company, with only 7% compound annual stock returns over the last five years, has woken up. Sony (NYSE:SNE) and the gang better watch out.

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Fool contributor Anders Bylund is a TSM shareholder but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure is always sharp.