LONDON, July 26 (Reuters Breakingviews) - Koninklijke Philips’ (PHG.AS) Chief Executive Frans van Houten is trying to soothe anxious investors. On Monday the Dutch medical technology group read more announced a plan to spend a pacifying 1.5 billion euros buying back its own shares – equivalent to some 4% of outstanding stock. The 37 billion euro group’s splurge was partly justified by a post-pandemic boom in elective surgeries, which led to strong demand for diagnostic imaging equipment in the second quarter. But its decision to take a 250 million euro provision for recalling awry breathing-aid devices for troubled sleepers is keeping shareholders awake.
Philips has now set aside 500 million euros for the machines, but the threat of litigation in the United States is giving investors nightmares. The company’s market value has fallen by roughly 10 billion euros since Philips disclosed the issue in late April. That’s more than 10 times the unit’s entire annual sales of 600 million euros to 700 million euros. Even so, a further 2% drop in Philips shares on Monday morning suggests van Houten faces more restless nights. (By Christopher Thompson)
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