Why does Philips "flip off" lighting?

Philips said on the 23rd that it will split the company into two, establish an independent lighting company, and merge the consumer and healthcare sectors into a company with a valuation of 15 billion euros (equivalent to approximately 118.245 billion yuan).

Let's first look at the discussion of this message on Weibo:

He Wei _HW: personal guess: combined with the separation of Lumileds a few months ago, may encounter the difficulties of LED transformation, this split, one hopes to give independent and flexible lighting to deal with the authorization, the second is the introduction of upstream industry partners prepare.

Muhai Yilan: Lumileds has merged with Philips Automotive Lighting as the main purpose of a new corporation or to compete with OSRAM in the high-end automotive lighting market, especially the automotive lighting market. Before that, Lumileds had made DOMINANT Malaysia its foundry. Most of the packages outside of power, including COBs, and the latter DOMINANT has a considerable share in the automotive market.

King of Thermal Conductives, Tang Yiying: Philips responds to the layout of market competition that is full of uncertainties in the future. At this time, business spin-offs are more clearly defined in strategic positioning and are more efficient in terms of management execution. However, what exactly is the development of this adjustment? A nonsense is an opportunity challenge.

Tyvek: Splitting is more serious than selling. The former is a rejection of the burden, and the latter is the focus of attention... Blessings Royal Philips, fine-tuned, and simple.

From July this year, Philips will merge its Lumileds LED division and automotive lighting division into a separate division. They will endeavor to attract third-party capital and set it up as an independent subsidiary. In the future, this segment of business may be possible. Stripping can be a glimpse. The combined revenue of these two businesses last year was approximately 1.4 billion euros (equivalent to approximately RMB110.36). The merger of Lumileds LED and Automotive Lighting Division is expected to be completed in the first half of 2015. The two departments' overall sales in 2013 were approximately 1.4 billion euros (equivalent to approximately RMB 110.36). In the automotive lighting market and consumer lighting market, Philips does not have an advantage. Splitting it is a simple way to keep it simple.

As the second largest lighting manufacturer in the world after Philips, OSRAM is undergoing in-depth structural adjustments, including the reduction of thousands of positions, and strives to transform from traditional lighting operations to new technologies such as LED. In April of this year, German lighting manufacturer OSRAM said that the company’s growth task in 2014 will be more difficult. It will plan to spin off the company’s largest share of the lighting fixtures and related components business unit in order to rapidly transition to new technologies. This is related to the continuous decline in revenue.

According to the financial report released by Philips in 2013, compared to 2012, overall sales of lighting parts were relatively stable. The LED light source in some quarters has experienced strong growth with a good development trend and broke out in the fourth quarter. Mature markets such as North America and Europe have all experienced a slight decline, while emerging markets such as China and India have grown rapidly. By 2016, LED market share will account for 45%~50%, the traditional lighting market will have a compound annual growth rate of 4~5%, and LED lighting will have a compound annual growth rate of 34%. In the field of lighting, the status of the leader is still very solid.

In 2014, combined with the first two quarters of financial reports, we can see that: In the first quarter, the Lighting Division sold well, and Philips Lumileds Lighting Division achieved double-digit growth. Over the fourth quarter of 2013, LED sales increased by 37%. In the second quarter, sales of the lighting sector increased by 1% to 1.943 billion euros; EBITA was 138 million euros. Among them, the sales of LED products increased by 43% year-on-year, accounting for 36% of the Philips lighting department's sales, compared with the same period of last year, the proportion increased by 11%. At that time, Philips said that the company’s traditional lighting sales fell 13% this quarter. The company will take corresponding measures to ensure the continued profitability of traditional lighting in the coming years. It seems that perhaps splitting the lighting division is Philips' choice.

Perhaps a simple structure can be more easily understood by investors and easier to assess the stock situation. The CEO of Philips, Van Hawthorn, said: "The timing of this reorganization for Philips to make the next strategic decision is very correct."

This also dialysised the epoch-making trend of LED lighting, reorganization lighting business will be better adapted to the fundamental changes in the lighting industry, from a single product to system services. LEDs have greatly changed the definition and application of global lighting methods. In order to adapt to and lead this revolution in lighting, even the world's giants must follow suit.