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 user 2008-12-12 at 11:14:52 am Views: 83
  • #20850
    Kodak Falls to Lowest in 34 Years After Forecast Cut
    08 — Eastman Kodak Co. fell to its lowest price in at least 34 years
    on the New York Stock Exchange after cutting its 2008 sales and profit
    projections for the second time in six weeks.The Rochester, New
    York-based company said it plans to intensify its focus on cash
    generation and reduce costs. Executives won’t receive a salary increase
    next year, where permissible by law, and Kodak will suspend its 2009
    match for 401(k) retirement savings plans in the U.S., according to a
    statement today.A deepening global recession and changes in the value
    of the U.S. dollar have threatened sales at the 128-year-old
    photography company as it tries to reshape itself for the digital age.
    The cuts kindled doubt about the success of Chief Executive Officer
    Antonio Perez’s four-year restructuring, concluded in December 2007,
    that eliminated 28,000 jobs and invested more in digital products as
    demand waned for traditional film.

    Kodak dropped 61 cents, or
    8.5 percent, to $6.59 at 4:02 p.m. in New York Stock Exchange composite
    trading, its lowest closing value since at least January 1974, as far
    back as Bloomberg data go. The shares are down 70 percent this year.“I
    fully believe further restructuring will be needed,” said Shannon
    Cross, an analyst at Cross Research in Livingston, New Jersey. “Their
    biggest challenge is cash flow. They’ve pulled their cash guidance for
    this quarter and are facing competitors with a stronger cash position
    and better access to liquidity. To help offset this, they’re going to
    need to trim spending somewhere.”Cross recommends selling the stock and
    predicts the company will announce additional cost reductions in
    January or February. She estimates Kodak has about $1.8 billion in cash
    with $1.3 billion in debt.

    ‘Dramatic Slowdown’
    “The company
    has seen the dramatic slowdown in consumer spending continue and
    worsen” in recent weeks, while commercial customers were finding it
    “increasingly difficult to secure financing” for new equipment
    purchases, Kodak said. The company withdrew its second-half and
    full-year sales and profit predictions, and didn’t provide new
    figures.“There is an unprecedented amount of uncertainty surrounding
    the economic environment and most signs indicate that we may be facing
    a prolonged global recession,” Perez said in the statement.Changes in
    the dollar’s value have also hurt earnings and sales, the company said.
    In 2007, Kodak derived more than half its revenue from outside the U.S.
    Since Sept. 22, the dollar has advanced 13 percent against the euro,
    making U.S. exports more expensive for overseas buyers.Kodak is
    suffering from slowing demand for digital cameras and printers and
    order cancellations in its printing business. Mounting unemployment, a
    lack of credit and falling property and stock values have helped push
    the U.S. economy into a recession. This may be the worst holiday
    shopping season in six years, according to the National Retail

    Fourth Quarter
    Kodak’s fourth quarter typically
    produces more sales than any other. The company forecast its third
    straight annual sales decline Oct. 30, and said it would eliminate more
    jobs. At the time, Kodak sliced its operating profit forecast in half,
    to a range of $200 million to $250 million, and said 2008 sales would
    drop by as much as 5 percent, after previously predicting a gain of as
    much as 2 percent.“They’re covering their backsides, making sure that
    people are not surprised at how bad the quarter’s going to be,” said
    Rusty Robinson, a Kodak shareholder and president of Brentwood,
    Tennessee-based Robinson Investment Group, which oversees about $102