"Das ist nicht fantastisch!" exclaimed Philips
(Disclosure: Yes, I know Philips is actually Dutch, not German. But I've been waiting for years to use that quote, and most of the Dutch I know speak German just fine, thank you very much.)
OK, so Philips isn't walking way from the whole U.S. market. Just the margin-crunching market for LCD televisions. And that's where today's story begins.
On Tuesday, the Dutch electronics giant caved to the inevitable, announcing that it will no longer make and sell LCD television sets for the U.S. market. Globally, Philips remains in the LCD game. But here in the birthplace of New Amsterdam, Philips will license its $1.6 billion TV business to Japanese cut-rate manufacturer Funai, effective Sept. 1, for at least five years. This means, for the foreseeable future, that the "Philips" TVs lining the aisles at your local Sears
Analogous to Syntax-Brillian's
And so, losing high-margin sales to Sony, and unwilling or unable to compete with Vizio on price, Philips is taking the "discretion is the better part of valor" route. It's outsourcing its margin squeeze to Funai, and accepting steady, dependable licensing revenue in lieu of the headache of trying to make the numbers work in this market.
I liked it when Syntax took the slow boat to profits in China last year. I like it that Philips is making the same move in the U.S. today. With a recession clearly looming in the U.S., Philips was facing little more than more of the same problems here for the next few years. Better to take the licensing money and run, not walk, away from the U.S. LCD market.
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