French consumer electronics and video specialist Thomson, came out with the figures it had already implied would be quite poor, and re-iterated its desire to sell its Grass Valley (broadcast equipment), PRN (in-store advertising) and Screenvision (cinema advertising) businesses.
But to be glaringly honest this was not as ugly a scene as the company had initially suggested by its announcement to get out of various businesses, which it first made during January. Although revenues have fallen 12.6% for the entire year, it would have only been off 7.7% at constant currency, and the last quarter was only down 8.2% measured the same way. Thomson says that the first few months of 2009 shows ‘some improvement’ compared to the 2008 trend, so the crisis seems to have already bottomed out.
The company says that the strike of the Writers Guild of America, plus some failed contract renewals and some renegotiation of DVD services all led to revenue declines, while good growth in manufacturing more Blu-ray disks, and the introduction of products for cable operators, including its digital-to-analog adapters, helped counter the bad news.
Revenues for 2008 were € 4.8 billion, and Thomson recorded a huge €1.9 billion loss ($2.44 billion) after taking an impairment of €1.6 billion on goodwill along with other impairments, write-offs and restructuring charges.
The company says it has net debt of €2.1 billion ($2.7 billion), and it has €769 million ($988 million) of cash. Thomson said that it only needs €250 million in cash to run business as usual.
Already Thomson says it has launched programs to cut costs of around €120 million a year which will start materializing in 2009, with a full impact by 2011 and the company has decided that it will only focus on areas relating to content creation ‘ so its Technicolor offerings with film and television studios, and in-home delivery assets (set-top-boxes and gateways) and its research and licensing.
The company has initiated the divestment of Grass Valley and PRN by appointing financial advisors while the sale of Screenvision will be started shortly. Thomson says it will close these deals before current year-end and might also add Residential Telephony and Digital Cinema Systems and some other smaller activities to be disposed of or closed in the same timeframe.
It also said that it had renewed a multi-year DVD replication deal with Disney and written a new one with Paramount Pictures to create a state-of-the-art post production sound facility at its Hollywood location. The Board proposes no dividend for the fiscal year 2008.