KODAK 1ST PROFITS AFTER YEARS OF LOSSES

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KODAK 1ST PROFITS AFTER YEARS OF LOSSES

 user 2007-02-02 at 11:35:00 am Views: 55
  • #17356

    Kodak posts first profit after years of losses
    ROCHESTER,
    N.Y. – After wading through a river of red ink for two years, Eastman
    Kodak Co. finally hauled in a modest profit in the fourth quarter. For
    the first time, it also generated more earnings from digital
    photography and commercial printing than from its storied film
    business.The world’s top maker of photographic film earned $16 million,
    or 6 cents a share, in the October-December period. That compared with
    a year-ago loss of $46 million, or 16 cents a share, when Kodak took
    hefty charges linked to its mammoth, four-year digital overhaul, which
    it aims to wrap up this year.Sales fell 9 percent to $3.821 billion
    from $4.197 billion largely because of its emphasis on improving
    digital profit margins, such as focusing more on the higher-end camera
    market.Excluding one-time items, Kodak beat Wall Street expectations by
    earning $169 million, or 59 cents a share, in the quarter.Analysts
    surveyed by Thomson Financial had forecast earnings of 55 cents a share
    but anticipated higher sales of $3.94 billion.The company’s shares rose
    34 cents, or 1.33 percent, to close at $25.86 on the New York Stock
    Exchange. They have traded in a 52-week range of $18.93 to $30.91.Kodak
    had run up eight quarterly losses in a row since posting a profit of
    $458 million in the third quarter of 2004. It has accumulated $2.7
    billion in restructuring charges and $2 billion in net losses. And it
    plans to eliminate as many as 27,000 jobs, with 23,300 already axed
    through 2006.Its overall digital sales in the fourth quarter fell 5
    percent to $2.45 billion, and revenue from film, paper and other
    chemical-based businesses dropped 15 percent to $1.36 billion.Although
    it made more money from traditional businesses last year — $423
    million vs. digital’s $343 million — profit from the digital arena
    shot up 92 percent in the fourth quarter to $271 million. Profit from
    the older businesses totaled $98 million.”I think it’s a very clear
    sign they’ve turned the corner,” said Ulysses Yannas, a broker with
    Buckman, Buckman & Reid in New York. “You have declines in overall
    sales but an increase in earnings, which means their cost-cutting
    efforts are staying ahead of the curve.”Although film sales have been
    shrinking by 20 percent to 30 percent in recent years, Yannas added,
    the 15 percent contraction in the fourth quarter suggests Kodak is
    benefiting from the demise of film operations at Japan’s Konica Minolta
    and Belgium’s Agfa-Gevaert NV.Three weeks ago, Kodak said it was
    selling its health-imaging business, created after the discovery of
    X-rays in 1895, to Canadian investment firm Onex Corp. for as much as
    $2.55 billion.Aside from paying down about $1.15 billion in debt, the
    sale could help fund Kodak’s long-awaited entry next week into the home
    inkjet-printer market dominated by Hewlett-Packard Co.”I’m very excited
    with the new product introductions that we’ll talk about” at a meeting
    with investors in New York on Feb. 8, Chief Executive Antonio Perez
    said in a conference call with analysts.”I feel more excited than ever
    with the possibilities of this company,” added Perez, who helped
    develop Hewlett-Packard’s lucrative inkjet-printer business before
    being hired by Kodak in 2003.Kodak has sunk more than $400 million into
    its inkjet project, analysts estimated.”Inkjet represents an intriguing
    profit opportunity. If you look at the existing players, the profits
    run deep and wide,” said Matthew Troy, an analyst with Citigroup in New
    York.”If Kodak can prove it can offer a product in a capital-efficient
    manner, in the abstract it certainly makes sense. But I think to a
    large degree, their timing is about two years behind hitting the sweet
    spot of the market.”For 2006, Kodak’s net losses totaled $601 million,
    or $2.09 a share, compared with a loss of $1.26 billion, or $4.38 a
    share, in 2005. Sales fell 7 percent last year to $13.27 billion from
    $14.27 billion in 2005.Even before shedding its health unit, which
    employs 8,100 people, its workforce had dipped to 40,900 — a level not
    seen since at least the Depression-era 1930s — from a peak of 145,300
    in 1988.