UPDATE 2-Philips Q3 core profit hurt by healthcare, shares fall

 * Philips healthcare unit stumbles in Q3

 * Group core earnings miss expectations

 * Shares down more than 7 percent

 
 (Adds shares, analyst comment, details)

 By Harro ten Wolde

 AMSTERDAM, Oct 13 (Reuters) - Dutch conglomerate Philips 
(PHG.AS: Quote, Profile, Research) posted sharply lower third-quarter core profit that
missed forecasts, partly hurt by its normally resilient
healthcare unit as orders in the United States slowed due to the
credit crisis.

 Shares of Philips, whose health care unit is one of the
world's top three hospital equipment makers, fell more than 7
percent at one point, underperforming a sharply higher market.

 "In the United States there is a higher dependence on
capital markets for hospitals for their financing," Chief
Financial Officer Pierre-Jean Sivignon said. "With the financial
crisis continuing we have no idea how long this situation will
persist."

 Sivignon said the healthcare unit had seen an order slowdown
in the past weeks, mainly in the United States. "We saw a little
bit of push-backs in orders from the third quarter to the fourth
quarter," he said.

 Philips' earnings before interest, tax and amortisation
(EBITA) fell 71 percent to 128 million euros ($175.7 million),
hit also by a previously announced charge for asbestos claims
and restructuring costs. The average forecast of eight analysts
in a Reuters survey was 168 million euros.

 The healthcare unit's EBITA rose to 197 million euros from
188 million, helped by a 45 million one-off gain, but missed
analysts' expectations.

 "Health was always considered to be stable. Now with orders
being pushed back in the United States due to the financial
crisis, the question is how long will this last and will it
happen in Europe too," Rabo Securities analyst Frits de Vries
said.

 ING analyst Marcel Achterberg said the healthcare unit,
which competes with GE Healthcare and Siemens (SIEGn.DE: Quote, Profile, Research), had
posted a sharp drop in underlying profitability in the third
quarter, below his "already conservative" estimate.

 Philips shares were down 5.3 percent at 14.95 euros by 0923
GMT, underperforming a 6.4 percent higher DJ Stoxx 50 index
.STOXX50. It was one of only two decliners in the index.

 BUYBACK

 Philips (PHG.N: Quote, Profile, Research) said it would slow its 5 billion euro share
buyback programme, of which 3 billion was completed.

 "For any company, cash is king in today's world," Sivignon
told reporters.

 He said the decision to slow buyback programme -- which may
not be completed next year as planned -- was a matter of
prudence, but it could leave room for takeover opportunities as
prices looked set to fall.

 Analysts said Philips' consumer unit, which the company has
restructured to turn around a loss-making television business,
held up well in the third quarter despite softening consumer
demand in mature markets.

 Profit at the consumer unit fell 44 percent to 95 million
euros, just above the average analyst expectation.

 Philips' consumer business generates the bulk of revenue in
North America and Europe from products ranging from MP3 players
and digital photo frames to water kettles, toasters and shavers.

 Group net profit rose 8 percent as the asbestos charge was
offset by a 302 million euro book gain from the sale of Philips'
remaining stake in Taiwan Semiconductor Manufacturing Company
TSMC (2330.TW: Quote, Profile, Research).

 Philips said it expected up to 230 million euros in
restructuring charges in the fourth quarter.
 (Reporting by Harro ten Wolde; Editing by Sue Thomas)