Analysts had seen the company posting a net profit of between 312 million euros and 380 million euros. Philips said stronger performances by its consumer products and component divisions were the main reasons for the improvement. The company also noted that its key semiconductors division is gathering strength, with margins improving, though sales were down by 2% excluding the contribution of the recently acquired VLSI. The company also benefited by comparison with the third quarter of 1998, when Philips's consumer communications unit suffered heavy losses in a joint venture with Lucent Technologies Inc.

Philips didn't give exact figures for PCC this year, but said profit at its consumer products division was 320 million euros compared with last year's 44 million euros, "mainly due to a significant reduction in the losses incurred at PCC." With nine-month income from operations at 1.12 billion euros, up 32% from 849 million euros in the same period a year ago, Philips said it intends to meet its double-digit growth targets for the whole year.

"The economic environment in Europe and the Asian Pacific is improving and compares favorably with the second half of 1998," Philips said.