AMSTERDAM (Reuters) - Philips Electronics said on Tuesday it would outsource its PC monitors business to TPV Technology, following earlier steps to boost profitability at its loss-making TV unit.


Philips said in a statement on Tuesday Hong Kong-listed PC monitor maker TPV will make and market all its IT Displays activities worldwide under a brand licensing deal, adding to a deal announced in April to transfer its North American television business to Japan's Funai Electric .

The Amsterdam-based company, whose TV operations have been loss making due to tough competition from rivals such as Taiwanese company Amtran's Vizio brand, said it would take charges of about 66 million euros ($103 million) in the second quarter of 2008.

The figure forms part of total charges of 125 million euros Philips expects to take this year, announced in April, a Philips spokesman said.

Philips reported a bigger-than-expected 28 percent drop in first-quarter core profit in April as its television business sank deeper into the red. It said last week it wanted to cut hundreds of jobs due to weak markets and to improve competitiveness.

Philips would continue its program to boost profitability at its remaining TV operations, mainly in Europe and Asia, the spokesman said.

Analysts viewed the deal as positive from TPV's perspective. JP Morgan's Charles Guo said TPV, which already helps Philips make up to three-fifths of its traditional monitors, can enjoy better economies of scale now that it has taken over the full business.

Using a global brand will also help raise the firm's profile at a time when it is struggling to expand its footprint in a global market dominated by Samsung and LG Display .

TPV stock in Hong Kong leapt more than 4 percent on Tuesday after the deal was announced.

Shares in Philips were down 2.8 percent at 20.4 euros by 1010 GMT, broadly in line with a weaker index of leading Amsterdam shares .

(Reporting by Gilbert Kreijger, additional reporting by Vinicy Chan in Hong Kong; editing by Sue Thomas)

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