Dutch electronics company Philips has finalized terms for a joint venture with Hong Kong-based TVP Technology for the transfer of its struggling television arm.
Computer and LCD screen manufacturer TVP will have a 70% stake in the new TP Vision business, which will be based in Amsterdam. Philips will hold the remaining 30%.
TP Vision will manufacture and distribute Philips-branded television equipment, which company executives say will return it to the top three of the market’s key players.
Philips chief executive Frans van Houten said the spin-off would maintain the electronics giant’s household name in the evolving home entertainment industry.
"The TV industry is changing, and we came to conclusion that we need to team up with a partner,” van Houten said in a statement. “TP Vision will be a strong player in the global TV market, and will ensure the continuity of the Philips TV brand in the markets.”
TP Vision Brings Global Coverage
Philips TV’s 3,000 employees will be retained in the new venture, which was first announced in November of last year.
In the third quarter of 2011, the company posted a loss of €54 million, and forecasted charges of €270 million ($360 million) in Q4, including separation expenses of around €100 million.
TP Vision will sell televisions across most of the world, with the exception of the United States, India and China, where Philips has sold off the distribution rights to other manufacturers.
Over the past five years, Philips’ television division racked up losses amounting to around €1 billion as the Dutch company lost ground to its rivals.
Ten years ago, the company branched out from its home electronics and entertainment operations, manufacturing lighting systems and scanners for the medical industry. It remains the world’s top lighting manufacturer and is the third-largest maker of hospital equipment.
Key Statistics - Global TV & Video Market (source: MarketLine)
- In 2010, the global TV & video industry saw revenues of almost $192 billion, indicating an annual growth rate of more than 6% for the four-year period from 2006 to 2010.
- Television sales were the sector’s most profitable in 2010, with $145.6 billion in revenues – almost 80% of the market's total value.
- Performance in the market is expected to soar, with forecasts of an annual growth rate of over 7% for the five year span of 2010 to 2015. This is predicted to push the market value to $270.5 billion by the end of the period.