The ratings on the Netherlands-based diversified technology group Koninklijke Philips Electronics N.V. (Philips) reflect its global reach and wide product diversity. Additional strengths include 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. From a financial perspective, relatively robust cash generation and low absolute debt levels translate into cash flow debt-protection measures adequate for the rating. The ratings are further supported by what Standard&Poor's Ratings Services regards as Philips' strong liquidity position and conservative financial policy. We consider these strengths to be offset by Philips' exposure to competitive pricing and innovation pressure in cyclical end markets, especially in the consumer electronics sector, although
