Equipment failure gives Philips sleepless nights

BNR Nieuwsradio
Erasmus School of Economics

In the investor panel of BNR Nieuwsradio, Mary Pieterse-Bloem, Professor of Financial markets at Erasmus School of Economics, discusses the continuing problems for Philips.

Due to Philips' faulty medical equipment, which continues to cause problems, the stock market value of Philips has fallen by 10%. Philips reported a quarterly loss of EUR 151 million, although analysts had expected Philips to break even. Pieterse-Bloem indicates that the repetition of bad results is mainly the reason why the share price is now falling sharply, because it dented investor confidence. Philips is facing a tough period: the company is facing criminal charges for its apnoea equipment and other items such as defibrillators have been found to be faulty.

Uncertainty about the future

The order book and sales are a bright spot in Philips' quarterly figures. Pieterse-Bloem does have a few caveats here: orders are often placed far in advance for medical equipment, and with such large contracts, it is not inconceivable that there could be penalties involved in cancelling an order. Although there are few other suppliers of the equipment that Philips makes, the decline in confidence in the company can obviously have an effect on the demand for equipment in the long term. On the other hand, Philips is a major player. What the consequences of this debacle will be in the long term remains guesswork.

Professor
More information

You can listen to the broadcast of BNR Nieuwsradio, 26 April 2022, here.

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