The ratings on Netherlands-based diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect its global reach and wide product diversity, combined with a strong brand name and several world-leading market positions in relatively stable cash-generative businesses such as medical systems, lighting, domestic appliances, and personal care. These strengths are offset by Philips' exposure to the cyclical and competitive consumer electronics sector, although the group is reducing this exposure. The ratings are also constrained by variable operating environments in certain divisions, product segments, and geographic markets, due to the weak global economy and intense competition. Philips' operating performance now appears to be on an improving trend, following a period of deterioration and difficult market conditions that started in the second half
