Telecoms weakness set to hit Philips profits

Electronics group Philips is expected to reveal cost-cutting measures along with a fall in profits.

Phillips will report on a difficult quarter on Tuesday and may announce major restructuring in a bid to calm investors.

In March Philips joined other chipmakers in warning that the US economic slowdown and weaknesses in the telecoms sector would hit its profits.

The Dutch-based company says its chipmaking division will report disappointing first quarter figures, echoing similar warnings from competitors Intel and ASM Lithography.

Philips says like-for-like profits from its semiconductor division will drop by 10% in the first three months of 2001, although revenues will rise by 7%.

The company is expected to record a fall in first quarter net profits from continuing operations to between £127m and £230m, compared to around £704m last time.

Analysts believe Philips announce plans to cut-costs as the sector continues to suffer from problems in the US.