Philips' NextGen Diagnostic System - Analyst Blog

Koninklijke Philips Electronics NV (PHG) has launched its next generation of cardiac ultrasound system, iE33 xMATRIX. The new system will provide a more efficient solution for echocardiograms in adults.

The new cardiac ultrasound system is an add-on to various offerings and developments from Philips to provide customized healthcare solutions to patients through provision of an enhanced imaging solution. With this system, diagnosis competency of cardiac system can be lengthened for detection of ischemic disease, evaluation of structural heart disease, as well as systolic and diastolic heart failure and arrhythmia.

The company is expected to unveil the iE33 xMATRIX cardiac ultrasound system at the European Society of Cardiology Congress (ESC) in Stockholm, being held from August 28 through September 1. The new diagnostic equipment is expected to benefit clinicians by providing a faster diagnosis of patients. Besides, the system has an exceptional two-dimensional and three-dimensional image quality with a single transducer, and can instantly attain 3D volumes. The system is equipped with new 3D workflow tools.

The company’s continued ability to increase cash flow by bringing down working capital has helped sustain investments in growth initiatives while maintaining a strong balance sheet. For 2010, the company expects significant expansion in revenues from the emerging markets. Working capital parameters expressed in days of sales, inventories and payables continued to improve in the most recent quarter. However, a rebound in the commercial construction market will lead to strong uptake in Professional Luminaires. The company intends to focus on cost control and invest on research and development as well as marketing initiatives in the emerging markets.

However, Philips’ global presence exposes the company to regional and local regulatory rules that may interfere with the realization of business opportunities and investments in the countries in which it operates. Philips’ overall performance in the coming years is dependent on realizing its growth ambitions in the emerging markets. Major competitors of Philips are General Electric Co. (GE), Panasonic Corporation (PC) and Sony Corporation (SNE).

Headquartered in Amsterdam, The Netherlands, Koninklijke Philips Electronics N.V. is one of the world’s largest electronics companies and the biggest in Europe, with sales of €26.4 billion in 2008 and €23.2 billion in the full year 2009. The company is divided into five distinct business sectors: Healthcare, Consumer Lifestyle, Lighting, Innovative & Emerging Businesses (I&EB) and Philips Group Management & Services (GMS).

We currently maintain our Neutral recommendation on Philips Electronics, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.