UPDATE 4-Philips Q4 earnings beat estimates, shares rise

* Q4 EBITA 662 mln euros vs Reuters poll 502 mln

* Proposes dividend of 0.70 euros/shr

* No reliable predictions due to economic circumstances

* Shares up 5 percent, outperforming main index

(Adds detail, CEO and CFO comment, updates share price)

By Harro ten Wolde

AMSTERDAM, Jan 25 (Reuters) - Philips Electronics (PHG.AS) beat earnings expectations in the latest quarter on rising demand for televisions and lighting, delighting investors who brushed off a murky outlook from the company.

Philips shares were up 5 percent at 21.365 euros by 1522 GMT. "Fantastic results. Tears in my eyes," ING analyst Jan Hein de Vroe said, keeping a "buy" rating on the shares with a 23 euro price target. "They beat expectations on all fronts."

Fourth quarter earnings before interest, taxes and amortization (EBITA) hit 662 million euros ($935 million).

This compared to the average of 502 million euros in a Reuters poll and 26 million euros a year earlier.

Fourth-quarter sales continued to improve from the third quarter, to 7.26 billion euros from 5.6 billion euros, and beat average analyst expectations of 7 billion euros. [ID:nWEA6372]

Philips said it was seeing continued weakness in the US healthcare market, where hospitals still have difficulties financing big-ticket items, such as brain scanners.

But growth in its television business helped the consumer lifestyle unit, while a rebound in automotive sales gave a boost to the lighting business.

"As healthcare and lighting are high fixed costs businesses, growth turning positive in 2010 should boost margins through operating leverage, on top of the full effect of cost savings," SNS Securities analyst Victor Bareno said in a note, raising the shares to "buy" from "hold".

Of 36 analysts tracking Philips shares 17 have a "strong buy" or "buy" rating, while 13 recommend to hold the shares and six have a "sell" or "strong sell" recommendation, according to StarMine data.

SOLID STEPS

The world's biggest lighting maker, also a top-three hospital equipment maker and Europe's biggest consumer electronics producer, gave no hint of a new timeline for its mid-term targets.

"Today's economic circumstances do not allow for a reliable prediction," said Philips' Chief Executive Gerard Kleisterlee, adding that the company proposed a 0.70 euro per share dividend "as a sign of confidence" in the future.

Chief Financial Officer Pierre-Jean Sivignon said he needed more clarity on the professional construction markets to give an outlook.

That market drives its professional Luminaires, which accounted for 31 percent of lighting sales in 2009. He added he also needed more macro-economic data from the United States as well as proof of the ability of governements to finance stimulus packages.

At the same time Philips would not buy back shares, Kleisterlee said, while the 2010 cost savings target was raised to more than 700 million euros, up from 600 million euros.

Philips did say it expected 2010 to be a "solid step" towards its EBITA margin target of at least 10 percent, which was 9.1 percent in the fourth quarter and 4.5 percent over 2009.

"If you are that ahead of expectations, you can see that they are moving to those targets. I expect they will be able to give more guidance in the first quarter," ING's De Vroe said.

Philips abandoned its mid-term programme in Dec. 2008 due to the recession, saying it could not reach the targets on time.

In its original plan, Philips targeted a group EBITA margin of 10 percent to 11 percent, annual average comparable sales growth of 6 percent and a return-on-invested-capital of 12 percent to 13 percent by the end of 2010.

A recovery of Philips' consumer lifestyle business had renewed analysts' hopes the group would come up with a new timeline. [ID: nLDE6050X2]

Philips competes with the healthcare units and lighting unit of General Electric (GE.N), which beat expectations on Friday and predicted flat earnings for 2010.[ID:nN22235838]

German competitor and industrial conglomerate Siemens (SIEGn.DE) said earlier this month trading conditions were still tough, while downward pressure on selling would impact revenues. [ID:nLDE6060O4]

For a graph on Philips revenue development see:

here

To view Reuters Insider interview with CFO Sivignon see: here

($1=.7078 euros) (Editing by Mike Nesbit and Louise Heavens)