The ratings on The Netherlands-based diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect its global reach and wide product diversification, combined with a strong brand name and several world-leading positions. They are supported by the group's strong positions in stable cash-generative businesses such as medical systems, lighting, domestic appliances, and personal care. The ratings are constrained by Philips' exposure to the cyclical and competitive consumer electronics sector, although the group continues to reduce this exposure. They are further constrained by variable operating environments in certain divisions, product segments, and geographic markets, due to the macroeconomic environment and competition. Philips' operating performance declined during the second half of 2008, as the global economic weakening affected the cyclical parts of the
