FALLING SALES AT KODAK IN Q3 , DOWN $111M
FALLING SALES AT KODAK IN Q3 , DOWN $111M
2009-11-03 at 11:47:30 am #22863
FALLING SALES AT KODAK IN Q3 ,DOWN $111M
ROCHESTER — The Eastman Kodak Company said Thursday it lost $111 million in the third quarter, its fourth consecutive quarterly loss, as sales fell 26 percent.
Eastman Kodak Co. (EK) swung to a loss in the third quarter as the recession and tight credit markets continued to hurt sales of its film, commercial printing supplies and digital cameras.
With a steeper-than-expected 26% drop in sales in the latest period, Kodak said full-year sales will decline at the worse end of its previously forecast range. And Kodak reiterated full-year earnings and cash targets despite a wider-than-expected third-quarter loss, saying it expects significant improvement in fourth-quarter results as end markets improve modestly and it generates more income from intellectual-property licensing.”In general we expect a sequential improvement in many of our core lines going into the fourth quarter,” said Kodak Chairman and Chief Executive Antonio M. Perez during a conference call to discuss results.Shares recently traded 0.43% higher at $3.48 after trading lower earlier in the session. Kodak shares were down 47% this year heading into Thursday’s results and have a 52-week range of $2.01 to $11.74.
Kodak’s third-quarter loss was $111 million, or 41 cents a share, compared with a profit of $101 million, or 35 cents a share, a year earlier. The latest quarter included $48 million, or 18 cents a share, in restructuring-related charges and other items, while the year-earlier period had $40 million, or 13 cents per share, in gains.Excluding items, the loss was 23 cents a share, compared with a profit of 22 cents a share a year earlier.Revenue fell to $1.78 billion from $2.41 billion, including a 2% negative foreign-exchange impact.Analysts surveyed by Thomson Reuters had expected a loss of 19 cents a share on $1.89 billion in revenue.
For the full year, Kodak now sees revenue declining at the high end of its earlier forecast for a 12% to 18% drop, based on the results to date and an increased focus on cash and earnings.But its segment earnings should be within its previous forecast, which was a range of break-even to $200 million, and Kodak continues to expect a loss from continuing operations under generally-accepted accounting principles at the low end of between $200 million to $400 million.”Our sales are stabilizing and some businesses are showing real signs of growth in the fourth quarter,” Perez said. “That, combined with operational improvements in several of our key product lines, increases our optimism for significant improvement in the fourth quarter, our largest quarter of the year.”
The company is counting on a modest improvement in the market for its consumer and commercial products, among other things, to achieve that improvement.”The challenge for Kodak is that so much does rest on the fourth quarter,” said analyst Shannon Cross of Cross Research. “Clearly they are expecting to produce a significant rebound.”Kodak said its consumer inkjet business gained market share, and it added new commitments for its new commercial printing platform, scheduled for delivery beginning in early 2010. Digital cameras and other consumer products introduced in the third quarter have higher margins and are also expected to help.The Rochester, N.Y., company on Sept. 16 said it expected its three business segments to post a total operating loss of $50 million to $60 million. The company Thursday reported a total segment operating loss from continuing operations of $36 million.
Kodak last month raised $700 million: $300 million by issuing notes due 2017 from Kohlberg Kravis Roberts & Co. and $400 million in senior unsecured convertible debt due 2017. As part of that deal, Kodak said it would use $575 million of the proceeds to retire $575 million in convertible notes, which investors had expected the company to retire in 2010 using cash balances.That has given the company some financial breathing room, despite a potential 35% dilution to existing shareholders.While declining to offer many specifics on fourth-quarter results so far, Perez said “October was good.”September and October saw Kodak’s first improvements in sales of entertainment imaging equipment, Perez said, calling the change significant.
In addition, about half of Kodak’s business in the consumer space is generated in the fourth quarter, and officials still expect Kodak can generate $250 million to $350 million in intellectual property royalty revenue for the year even though such revenue has been lower so far this year. It cited a number of transactions under discussion, but wouldn’t provide specifics on the status of negotiations.Kodak late last year filed a U.S. trade complaint against Samsung Electronics and LG Electronics, seeking to ban imports of mobile phones with digital cameras that Kodak claims violate its patents. It has also filed patent-infringement lawsuits against the companies seeking cash and other sanctions.
Kodak, meanwhile, continues to negotiate with other parties wishing to license its technology, executives said.Chief Financial Officer Frank Sklarsky and Perez said they believe Kodak’s restructuring efforts since the fourth quarter of 2008 will help the company leverage its sales into profits as the economy improves. Kodak has cut 4,275 positions since the fourth quarter of 2008, has trimmed its product portfolio and remains on track to meet or exceed its cost-reduction targets for the year, Sklarsky said.Kodak put off questions about longer term financial goals, saying it must see fourth-quarter results before it provides a 2010 update in early February.