UPDATE 1-Thomson to shut North American retail telephone unit

Wed Nov 5, 2008 1:04pm EST

* Thomson SA to exit North American retail telephone business

* The business is expected to show an operating loss.

(adds details from statement)

PARIS, Nov 5 (Reuters) - French media technology group Thomson SA TMS.PA said on Wednesday that it would close its loss-making retail telephone business in North America in a bid to bolster profitability.

The business, which is part of Thomson Grass Valley unit, and sells mainly DECT telephones to retailers in North America, will be shut down.

"We have started a process under which this business in North America will be halted," a company spokeswoman said.

The North American retail telephony business had around 135 million euros in revenue in 2008, down 18 percent from 2007 and is expected to show an operating loss of over 20 million euros in the current year, the statement said.

Restructuring costs linked to the decision to close the North American business are estimated to be around 60 million euros. The number of jobs lost by the move will be approximately 140 worldwide, the statement said.

The net cash impact of the decision to exit this activity is estimated at 30 million euros over 2008/2009.

Thomson's related European and remaining Asian activities are the subject of continuing review, the group said, adding it will continue to pursue its business focusing on set-top boxes and multiple play gateways.

Last month Thomson vowed to restructure or sell unprofitable businesses to bolster profits, generate cash and cut debt.

Thomson shares have lost over 87 percent so far this year, giving it a market capitalisation of some 345 million euros, and its bonds have been downgraded to junk status amid concern over its finances and an uncertain outlook.

Many investors, weary of the lack of synergies between the group's businesses, have been pressing for a simplification of its structure and the exit from loss-making businesses. (Reporting by Dominique Vidalon; Editing by Richard Hubbard)

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