Philips is mercilessly beaten after the announcement that the group is cutting 1100 jobs in the Netherlands. Analysts and investors describe the company as ‘loose sand’. The management has no control over the workplace and the entire corporate culture needs to be overhauled, is the general conclusion.
The round of layoffs mainly affects the region around Eindhoven and Best. Jobs are also disappearing in Amsterdam, where the head office is located. The new Philips CEO Roy Jakobs wants to put an end to the persistent problems at Philips with the round of layoffs and reorganization announced on Monday. Currently, sleep apnea devices are a headache issue that not only costs Philips millions, but also causes considerable reputational damage. Previously, it concerned other ventilators and defibrillators.
Stubborn problem
The plans come down to Philips making major cuts in management, says analyst Jos Versteeg. The InsingerGillissen analyst does not know whether that is the solution. According to him, former CEO of Philips Frans van Houten has also been working on this for years. “But it’s a persistent problem.”
This is also confirmed by the Association of Effectenbezitters (VEB). Even before the announcement of the reorganization, he thought that ‘the entire corporate culture must be overhauled’. The interest group of shareholders is of the opinion that ‘a deadbeat like the apnea file’ can only be prevented if the head office in Amsterdam gets a better grip on the ins and outs of the Philips subsidiaries.
Falling stock price
The reorganization of Philips will cost 6,000 jobs worldwide. This comes on top of the 4,000 jobs cut in October. “On a total of less than 80,000 employees, that is more than 13 percent. That is quite extreme,” says Versteeg. The major intervention is also a result of the falling share price of Philips last year. As a result, shareholders began to put pressure on the top of Philips.
Of all business units, Personal Health, the branch with electric toothbrushes, shavers and baby products, is still very important to Philips. This subsidiary is doing very well, says Versteeg. “The company sees good opportunities for ‘connected care’ where patients are monitored remotely. “But the competition is very strong there,” the analyst believes.
Investors
Rients Abma of Eumedion thinks that investors ‘appreciate’ the adjustment of Philips’ strategy. Abma is director of the trade association for institutional investors. These are parties with a lot of assets, such as pension funds and life insurers.
“Jakobs has been appointed chairman of the board of Philips by shareholders with an almost one hundred percent majority. It expresses confidence that he could put things in order. The big test is the announcement today with the strategy update that has come to save the path to growth again. Now it remains to be seen whether that path will actually be successful.”