Philips sneezing from Viv U's illness
Group reports $1.37 bil in net losses in three months
The group reported $1.37 billion in net losses in the three months, almost double those at the same time last year, mostly due to writeoffs. Philips is Viv U's second biggest stakeholder.
Dutch-based Philips is still taking the fall from less-than-stable media investments, many of which it sold off five years ago.
It began plowing cash into media assets in the 1960s when it bought up Mercury Records.
By the time it sold its stake in Polygram in 1998 for a transaction worth $10.4 billion, including stock in Seagram, it had dabbled big time in music through Polygram, film through Polygram Filmed Entertainment and European cable interests through a 50% stake in a company now known as United Pan-Europe Communications (UPC). Philips even invested in Sport 7, a Dutch sports channel that failed soon after its launch.
Merger set up stake
The merger in 2000 of Seagram, Vivendi and Canal Plus that created Vivendi Universal gave Philips its current stake in Viv U.
Philips vice chairman and chief financial officer Jan Hommen gave no indication as to whether Philips planned to get rid of the Viv U stake in the future. He admitted, however, that it might have been wiser to unload the stake, currently valued at $809 million, earlier.
Philips CEO Gerard Kleisterlee said in February he saw the 3.5% stake in Viv U as a valuable investment and had no plans to sell it.
Many market watchers interpreted Kleisterlee's recent appointment to the Viv U board as further evidence Philips would hold on to it, despite the slide in the media giant's shares.
Hommen expects further writeoffs as a result of the Viv U stake at year end. The company, excluding exceptional items, reported a second-quarter net profit of $173 million, up from a loss a year earlier of $386 million.
(Reuters contributed to this report.)
