Philips Electronics said it agreed to sell its audio and video business to Japan's Funai Electric Co for 150 million euros ($202 million) to focus on the more profitable areas of home appliances, healthcare and lighting.
The sale marks Philips' exit from one of its traditional businesses. It has already hived off its troubled television business, setting up a joint venture with Hong Kong-based TPV in early 2012.
The Dutch group has struggled for years to compete with lower-cost Asian makers of consumer electronics such as televisions. The sale of its audio and video business means Philips' consumer division will focus on appliances such as toasters, shavers, juicers and coffee makers.
"With this transaction we are taking another step in reshaping the consumer lifestyle portfolio and transforming Philips into the leading technology company in health and well-being," said Philips Chief Executive Frans van Houten.
Philips, which will also receive licence fees from Funai, reported a fourth-quarter net loss of 355 million euros on Tuesday, citing previously flagged provisions and charges.
It warned in December it would take a provision of 509 million euros to cover an EU fine for cartel practices in its television business.
It had also warned restructuring charges would increase to 380 million euros from a previously estimated 300 million, arising from the integration of certain operations.
But underlying profits improved with adjusted quarterly earnings before interest, tax and amortization (EBITA) of 875 million euros on sales of 7.161 billion euros.
Analysts in a Reuters poll had forecast adjusted EBITA of 847 million euros, a net loss of 308 million euros and sales of 7.161 billion euros.
Philips had reported three consecutive quarters of better-than-expected net profit in 2012, after struggling with weak economic growth, fragile consumer spending and government budget cuts in several markets.
Western Europe accounts for roughly a quarter of group sales, and North America nearly one third. ($1 = 0.7429 euros)