The ratings on Koninklijke Philips Electronics N.V. (Philips) continue to reflect the company's rapidly improving operating performance, strong positions in several core business segments, and conservative capitalization measures. These factors offset the group's modest profitability in consumer electronics, as well as its exposure to the cyclical and capital intensive semiconductor industry. With sales of €37.9 billion in 2000, Philips has a diversified portfolio mainly focused on challenging high-tech sectors, such as the semiconductor industry, and the competitive, low-margin, consumer electronics business. The group's lighting, domestic appliances, and medical systems divisions are, however, stable and cash generative. Over the past three years, Philips has extensively restructured its business portfolio to strengthen its positions in several fast-growing segments. For example, the acquisition
