Philips Electronics set core profit forecasts for next year that disappointed some investors, sending its shares lower, but kept its 2006 target for its main business units on Tuesday.
Philips, the world's biggest lighting maker, a top-three hospital equipment maker and Europe's biggest consumer electronics manufacturer, also said it would cut management and service costs.
The company said it would scrap plans to introduce a navigation device but look for acquisitions in the market for consumer electronic peripherals and accessories.
"I don't think you should expect large acquisitions," Rudy Provoost, the chief executive of Philips' consumer electronics unit, told analysts at a meeting.
Ahead of the meeting, Philips said in a statement that its 2006 earnings before interest and tax (EBIT) margin for the unit should be slightly shy of 4 percent. Philips had previously forecast a 3.5 to 4 percent margin for the unit, which generates 38 percent of its total revenues.
Consumer electronics is the Philips division that has poured efforts into marketing its "Ambilight" line of flat-panel televisions that provides ambient lighting behind the screens.
"In terms of EBITA, Philips' group margin target will exceed 7.5 percent for 2007 onwards, which is consistent with previous earnings guidance," the company said.
It estimated a 2007 margin for earnings before interest, tax and amortisation (EBITA) of about 3 percent for the consumer electronics unit, 15 percent for domestic appliances and personal care (DAP), 12 percent in lighting and 14 to 15 percent in medical systems. Philips shares fell 1.5 percent to 27.49 euros by 1029 GMT, underperforming a 0.6 percent rise for the DJ Stoxx European technology index.
Philips also said it would cut group management and services costs by 75 million euros ($100 million) by the end of 2007 and invest 100 million euros in its corporate brand campaign next year.
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