"...As new technologies in video recording and playback are rapidly emerging, Philips’ Consumer Electronics Mainstream division is to refocus its VCR activities. Following expansion in promising digital consumer electronics product areas such as digital video and optical disc technologies (DVD), the mass manufacturing of VCRs for the European market will be outsourced to Funai Electric Company, of Japan, the world's largest manufacturer of VCRs. Philips will scale down its own development activities for video tape recorder technology and will concentrate its resources on marketing and sales.

Guy Demuynck, CEO of Philips Consumer Electronics Mainstream, says: "The growth in the global consumer electronics market is slowing down. Philips is holding a strong top three market position for video recorders and TV/Video combis worldwide, with a clear number one position in Europe. To safeguard this leading position we decided to expand our cooperation with Funai." Currently, video recorders are manufactured by Philips in Austria (Vienna) and Hungary (Szekesfehervar). The industrial activities for TV/Video combis and the growing industrial activities for DVD will remain in Szekesfehervar.

Between now and mid next year, these measures will lead to a headcount reduction of approximately 1,000 of which 850 are related to the VCR activities in Vienna. The latter is part of an overall industrial restructuring program in Vienna leading to a loss of 1,200 jobs. The related restructuring charge is included in the figures for the second half of this year as mentioned by Philips at the Press Conference on the semi-annual figures on July 17, 2001..."