Koninklijke Philips N.V PHG shares sank over 5% in after-hours trading, as the company reported first-quarter 2016 earnings and simultaneously dashed shareholders’ hopes of a sale of its lighting unit.Investors reacted badly to the earnings report despite a rise in overall adjusted quarterly profits, as the company indicated that it is inclined toward floating an IPO of its lighting unit — its original line of business – instead of selling it. .The Dutch electronics giant reported first-quarter net income of €37 million ($40.8 million) compared with the prior-year quarter’s figure of €100 million. The decrease was largely due to tax charges related to the separation of the company’s lighting business.However, Philips’ adjusted earnings before interest, taxes and amortization (EBITA), the company’s preferred measure of operational performance, rose 14% year over year on the back of impressive cost productivity and top-line growth. Moreover, Philips’ Accelerate program, continuing to act as a growth driver across its segments, supported the improvement in earnings.Inside the HeadlinesTotal revenue for the quarter increased 3% year over year to €5,517 million ($6,085 million). Improvement in the top line was largely driven by solid sales in Consumer Lifestyle and Healthcare segments. Sales grew 3% year over year on a comparable basis, fuelled by growth in Healthtech portfolio.Philips reported adjusted EBITA of €374 million ($412 million), up over 14% from €327 million recorded a year ago. Impressive top-line performance across three of the company’s operating segments, combined with improved product mix and cost efficiencies, drove EBITA growth.On the other hand, net cash flow generated from operating activities came in at €10 million ($11 million) compared with net cash flow used for operating activities of €256 million in the year-ago quarter.Segmental RevenuesIn the first quarter, Personal Health segment’s sales rose 6% year over year to €1,610 million ($1,776 million). The segment reported a 6% year-over-year increase in comparable sales too. The segment’s growth was driven by growth in Health & Wellness and Personal Care sales. Geographically, Middle East & Turkey, Central & Eastern Europe outperformed with double-digit growth, while mature geographies like North America and Western Europe were also strong.Diagnosis & Treatment revenues increased 9% in the quarter to €1,419 million ($1,565 million), backed by double-digit growth in Image-Guided Therapy as well as Ultrasound and Diagnostic Imaging business lines. On a comparable basis, segmental revenues climbed 5% year over year, primarily driven by double digit growth in growth geographies like India and China, and mid-single digit growth in Western Europe.Connected Care & Health Informatics revenues grew 11% in the quarter to €694 million ($765 million), backed by growth in Patient Care & Monitoring Solutions as well as Healthcare Informatics, Solutions & Services. On a comparable basis, segmental revenues climbed 9% year over year, primarily driven by double digit growth in Middle East, Turkey and India.Revenues in the HealthTech Other segment showed weakness, dropping almost 24% to €103 million ($114 million). The decline in this segment was mainly attributable to lower revenues from IP Royalties due to the expiration of licenses, which more than offset the strength in emerging businesses.Lighting revenues dropped 2% year over year to €1,691 million ($1,865 million), as a decline in Lamps and Professional business lines more than offset growth in LED and Home operations. On a comparable basis also, revenues dipped 2% year over year.Sales in the mature geographies rose 3% year over year on a comparable basis, as growth in North America more than offset a decline in other areas. Comparable sales in growth geographies also increased 3% on a year-over-year basis, owing to improved sales in India and China.Changes in Reporting StructureThe company recently announced changes in its financial reporting structure, which were to take effect from its first quarter 2016 earnings report. The revised structure will accommodate certain changes in operating segments, with the company now reporting its results under six segments.The company’s restructured operating segments include Personal Health, Personal Health, Connected Care & Health Informatics, HealthTech Other, Lighting and Legacy Items.Earlier, the company had four reportable segments:Healthcare, Consumer Lifestyle, Lighting and Innovation, Group & Services.LiquidityExiting the quarter on Mar 31, 2016, Philips’ cash and cash equivalents declined to €1,385 million ($1,573 million) from €1,667 million a year back.The company’s long-term debt stood at €3,984 million ($4,524 million) compared with €4,118 million a year ago.Accelerate ProgramManagement believes that Philips’ Accelerate program will act as a catalyst for long-term growth by enabling expansion into adjacent and new growth markets. During the quarter, the Accelerate Program helped in boosting revenues and leveraging digital capabilities.Moreover, through the program, the company has achieved gross savings of €19 million in overhead costs during the reported quarter. The company intends to reduce overhead costs by €1.8 billion under the program.Based on the present market scenario and accounting for macroeconomic headwinds, management expects modest sales growth for full-year 2016. The company has also committed itself toward pursuing growth opportunities and improving EBITA in 2016.Update on Lumileds DealIn January, Philips scrapped its proposed $2.8 billion plan to divest its LED business, Lumileds, to GO Scale Capital after failing to receive regulatory approval for the same.The planned sale was a part of its strategy to gradually exit the lighting business.The company intends to offload its Lighting business (which could be worth up to €5 billion), and has drawn interest from several investment groups, including Blackstone Group LP and Onex Corp.Philips’ intention to offload its almost 125-year-old lighting arm is a part of a broader strategic revamp of the company’s operations, so that the company can focus its resources on the more profitable health and consumer products businesses.In the earnings release, management indicated that that it is now inclined towards a possible listing of its lighting unit instead of selling it.To ConcludeWe believe Philips’ strategic initiatives, undertaken in targeted growth areas, primarily led to a relatively strong quarter. The company continues to pursue growth opportunities in the healthcare market. Additionally, rapid market traction of innovative health and well-being solutions are adding to the company’s strength.However, due to factors like macroeconomic headwinds, stiff competition and softness in certain key markets, Philips currently carries a Zacks Rank #5 (Strong Sell).Some better-ranked stocks in the same space include Mistras Group, Inc. MG and Siemens Aktiengesellschaft SIEGY, sporting a Zacks Rank #1 (Strong Buy), and VOXX International Corporation VOXX, holding a Zacks Rank #2 (Buy).Note: 1 EUR = $ 1.1029 (period average from Jan 1, 2016 to Mar 31, 2016) 1 EUR = $ 1.1355 (as of Mar 31, 2016) One Philips ADR corresponds to one ordinary share.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KONINKLIJKE PHL (PHG): Free Stock Analysis Report MISTRAS GROUP (MG): Free Stock Analysis Report SIEMENS AG-ADR (SIEGY): Free Stock Analysis Report VOXX INTL CP (VOXX): Free Stock Analysis Report To read this article on Zacks.com click here.