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Philips Splits into Two Companies Focused on Health and Lighting

Philips was all about business at the IFA Global Press Conference last week, detailing ongoing plans to restructure their company and double down on health tech. The plan would see Philips merge their consumer electronics and health tech operations while spinning out their lighting business in an IPO that could come sometime next year.

According to a Wall Street Journal report, Philips is restructuring to address sliding profits. The restructuring is meant to cut costs, which, as we all know, is code for job losses down the line. But, being an electronics company based in Europe isn’t the easiest game in town right now—while the euro has slid significantly over the past year, its relative strength makes it difficult for Philips, based in the Netherlands, to compete in an export-heavy business like consumer electronics. Companies based in countries with weaker currencies make relatively more when their goods are sold in other currencies overseas, thanks to favorable exchange rates. To keep up, Philips has little choice but to cut costs to increase profit margins.

Philips Lighting, which could become its own publicly traded company next year, would focus on large-scale LED lighting for arenas and museums and on Philips’ existing range of home LED lighting, including their Hue line. Royal Philips will be the old Philips, and will use the expertise of the consumer electronics division to double down on health tech, which Philips hopes to address in all sectors. That includes their home products like Sonicare electric toothbrushes and imaging and other diagnostic technology for hospitals and clinics, with the company trying to rebrand itself as a leader in health tech.

For now, Philips is presenting this information in vague terms—planning is still underway, and we won’t know exactly what the new Philips will look like until next year.

Follow us here in early September for more coverage of Philips products, and other hot gadget announcements at IFA 2015 in Berlin.

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