Europe's biggest consumer electronics company has reported a massive loss and says it does not expect a turnaround in semiconductor market until 2002.

Philips reported a 770m euro ($658m, �470m) second quarter loss, compared to a profit of 3.6bn euros in the same period last year.

Defying its motto of 'Let's make things better', the Dutch company's results were much worse than analysts expectations.

For workers at Philips there is more bad news. The company expects to cut 4,500 to 5,500 jobs, or 3% of its work force, in its semiconductor unit in the second half of the year.

This comes on top of about 7,000 jobs cut in the first half of 2001 reducing the total work force to 212,000 from 219,000, the company said.

Break-even possible

But Philips said it expects to break-even or record a small loss before special charges for the full year.

A slump in the semiconductor, telecom and personal computer sectors as well as a falling consumer demand in all markets across the globe were blamed by the company.

"We remain very cautious about the economic development for the rest of the year, as visibility remains low. For semiconductors our current expectation is that the industry will not see a recovery before 2002," Philips said in a statement.

By 1110 GMT, Philips stock was four percent weaker at 28.02 euros recovering slightly from a session low of 27.53 euros.