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Shedding old businesses for new directions

Royal Philips Electronics, the Dutch industrial giant, is convinced of two things: The population is getting older and it is getting greener.

Those two trends are guiding the company as it continues to transform itself, reorganizing its divisions and jettisoning product lines while picking up others.

Long known in the United States — when it’s not confused with the company that makes Phillips Milk of Magnesia — as a manufacturer of Magnavox televisions, Norelco shavers and Philips incandescent light bulbs, Royal Philips wants to get away from home electronics and instead sell hospital scanning and monitoring equipment and high-tech light bulbs made with light-emitting diodes.

“We were a technology-driven company,” said Gerard J. Kleisterlee, the chief executive of Philips. “But that is only one element. Now we are focusing on care cycles. ‘Health and well-being’ is a common theme that everyone works on.” The company’s chief financial officer, Pierre-Jean Sivignon, put it another way: “An uptick in world aging and chronic diseases will drive our business.”

In November, Philips said it would lay off 1,600 health care division employees, 5 per cent of its work force, because of the recession. And it is unlikely that an LED light bulb that costs more than $50 will find many eager buyers as companies and households cut back. — New York Times News Service

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