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 user 2010-11-03 at 9:02:42 am Views: 35
  • #24089

    dollar” sounds like something out of those Charles Atlas ads in the
    back of old comic books, where the beach bully kicked sand all over
    98-pound weakling Mac.
    But currency issues add up to big bucks for
    some of the region’s biggest employers and exporters. When Xerox Corp.
    earlier this month announced quarterly results, its sales of $5.4
    billion were up 48 percent over the same quarter a year earlier — but
    they could have been up 50 percent except for negative impact from

    Eastman Kodak Co. last week similarly said its $1.76
    billion in third-quarter sales would have been slightly higher if not
    for “unfavorable foreign exchange impact.” And Xerox cited “adverse
    currency,” particularly issues with the Japanese yen, as one of the
    reasons it plans to cut 2,500 jobs worldwide over the next 12 months.

    basics of currency issues are simple — a weak dollar makes U.S.
    products cheaper overseas and more attractive to foreign buyers. But
    beyond that, there are two separate concepts that are important:
    “translation currency,” which is the translating of overseas results
    back into dollars, and “transaction currency,” which has to do with the
    cost of sales and buying products overseas.

    For Xerox,
    translation currency mostly involves the euro and British pound. A weak
    dollar helps because sales in Europe, when translated back into dollars,
    rake in more greenbacks than they would have. But since the dollar is
    stronger than it was a year ago, currency issues hurt Xerox sales by 2
    percentage points.

    Yen, meanwhile, are the focus for Xerox in
    transaction currency issues. As the company buys products from its
    Japan-based Fuji Xerox partnership, those purchases are done in yen. In
    the past couple of years, the yen has strengthened dramatically against
    the dollar, creating a big impact on costs.Thanks to Xerox investor
    relations manager Jennifer Horsley for explaining these effects on the

    Kodak posts narrower 3Q loss of $43m
    N.Y. — Eastman Kodak Co. narrowed its third-quarter loss to $43
    million, lifted by vigorous inkjet printer sales, lower costs and a big
    licensing deal with a digital-camera business.Its adjusted earnings
    handily beat Wall Street expectations, driving its stock up more than 10
    percent Thursday.The results offered glimmers of hope that the
    picture-taking pioneer is springing back from the economic downturn in
    its decade-long struggle to transform itself into a digital photography
    and printing powerhouse.But analysts say the July-September quarter also
    raised some troubling signs: pricing pressures in Kodak’s low-end
    digital camera business, stiff competition from Hewlett-Packard Co. in
    retailer kiosks, and a slump in movie-film revenue mirroring a migration
    to digital-cinema alternatives.One-time licensing payments “are fine,”
    said Shannon Cross of Cross Research in Livingston, N.J. “But it doesn’t
    reflect significant strength in the core business, which is what we
    keep waiting to see. … I don’t think that improvement is coming
    through fast enough.”

    The camera-licensing agreement with an
    undisclosed rival – part of a Kodak drive to safeguard its rich array of
    1,000-plus digital-imaging patents – added about $210 million in gross
    profit to the quarter, Chief Executive Antonio Perez said in a
    conference call with analysts.Kodak’s ability to generate licensing fees
    and royalties from intellectual-property disputes – both in
    negotiations and through the courts – shows no sign of slowing, Perez
    said.”I look at IP the way we look at the rest of the business – we have
    an asset,” Perez said.

    Kodak has said it expects to generate an
    average of $250 million to $350 million annually through 2011 from
    intellectual property. It has already booked $770 million this year. It
    is also suing Apple Inc. and Research in Motion Ltd. over camera
    technology in their iPhone and BlackBerry smart phones.”It is obvious
    now looking back that maybe we were too conservative with the numbers we
    gave you in IP,” Perez told analysts. “The track record is nothing less
    than spectacular.”

    Kodak lost the equivalent of 16 cents a share
    in the quarter, which compares with a loss of $111 million, or 41 cents
    per share, a year earlier.Sales fell 1 percent to $1.76 billion. But
    revenue from digital businesses rose 10 percent to $1.33 billion,
    propelled in part by a 26 percent jump in sales of consumer inkjet
    printers and ink. That helped boost the segment’s profitability for the
    fourth straight quarter.Traditional film-based revenue slid 25 percent
    to $431 million from $572 million, hit by industry-related volume
    declines and rising costs for silver and aluminum. Operating earnings in
    the photographic film, photofinishing and entertainment film unit
    narrowed to $20 million from $47 million.

    Excluding items, Kodak
    said it lost $5 million, or 2 cents per share. Analysts polled by
    Thomson Reuters expected Kodak to lose 31 cents per share on sales of
    $1.61 billion.Its shares jumped 41 cents, or 10.3 percent, to $4.38 in
    afternoon trading. They are trading at the low end of a 52-week range of
    $3.26 to $9.08.The 129-year-old company, based in Rochester, N.Y., is
    banking on replacing the huge profits it once made from photographic
    film with ink revenue from promising new lines of digital inkjet
    printers for both consumer and commercial markets.Those investments have
    yet to pay off. Kodak doesn’t expect to generate its first profits from
    home inkjet printers until 2011, or from a bevy of versatile,
    high-speed digital presses until 2012.

    Kodak doubled the number
    of consumer injket printers installed in 2009 to more than 2 million
    units. Ulysses Yannas, a broker for Buckman, Buckman & Reid in New
    York, expects more than 5 million will be installed by 2011.”I’m
    focusing on how well they are progressing on the printing side,” Yannas
    said. “To me, that’s the Kodak story, as it used to be a film story in
    the past.”

    Kodak is relying on leaner costs to see it through its
    transition into a digital imaging powerhouse. It has chopped almost
    50,000 jobs since 2002 and its work force of 20,300 is its smallest
    since the 1930s. But after a $3.4 billion turnaround from 2004 to 2007,
    its momentum was stalled by the recession.Gross profit widened in the
    quarter to 27.1 percent of sales from 20.3 percent, driven by the
    one-time licensing deal and steady operational improvements. The company
    maintained its full-year revenue outlook of $7.5 billion to $7.7