KODAK PLANS TO CUT 3,000 MORE JOBS

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Kodak plans to cut 3,000 more jobs
This is an undated photo provided by Eastman Kodak Co., CEO Antonio Perez is shown. After three long years, Eastman Kodak Co. is on track to complete its historic transformation this fall into a digital-imaging company focused on consumer photography and commercial printing, Perez says. “The dream when we started was that we will wake up in 2008 with a digital company that we wanted, and we are very close to that,” Antonio Perez said in an interview Wednesday, Feb. 7, 2007.This is an undated photo provided by Eastman Kodak Co., CEO Antonio Perez is shown. After three long years, Eastman Kodak Co. is on track to complete its historic transformation this fall into a digital-imaging company focused on consumer photography and commercial printing, Perez says. “The dream when we started was that we will wake up in 2008 with a digital company that we wanted, and we are very close to that,” Antonio Perez said in an interview Wednesday, Feb. 7, 2007.Eastman Kodak Co. is cutting 3,000 more jobs this year as the picture-taking pioneer wraps up its wrenching transformation into a digital-imaging company focused on consumer photography and commercial printing.By year-end, its work force will slip below 30,000, less than half what it was just three years ago.On top of 27,000 layoffs already targeted, Kodak said Thursday it is reducing its payroll even further to accommodate the $2.35 billion sale in January of its health-imaging unit and its costly foray this week into a high-margin inkjet-printer market dominated by Hewlett Packard Co.”The dream was that we would wake up in 2008 with the digital company that we want to have. We’re still right on that track,” Chief Executive Antonio Perez said at an annual meeting of Kodak analysts and institutional investors.”We will finish this year. This is done. … This is the last year of restructuring.”The company that put film cameras into nearly every home in America acknowledged in 2003 that its analog businesses were in irreversible decline. It outlined a strategy to invest in new digital markets governed by entrenched heavyweights such as HP, Seiko Epson Corp. and Canon Inc.As it battled to outrun sliding demand for film, its century-old cash cow, Kodak embarked on a nearly $3 billion shopping spree but also ran up $2 billion in net losses over eight straight quarters. It finally snared a $16 million profit in the October-December period when, for the first time, it earned more from digital than from film, paper and other chemical-based products.”As far as I’m concerned, Kodak is finally over the negative surprises,” said Ulysses Yannas, a broker with Buckman, Buckman & Reid. “They are entering a phase where increasingly profitability starts to show.”A year or two out from here, it will be a totally different company,” with profits driven by an inkjet-printer system that “probably is a lot bigger than anybody thinks it’s going to be.””The inkjet introduction now appears to be a bet-the-company move for Kodak,” said George Conboy, president of Brighton Securities, a money-management firm in Rochester, Kodak’s hometown.”If they make a go of it, it could be very successful. If they don’t, they’re not going to have a second chance for a second act of this magnitude because the capital will not be as easy to come by. I don’t think it has to work in ’07 but it needs to show concrete results in ’08.”Kodak unveiled a trio of home printers Tuesday that produce documents and photos using ink cartridges that cost roughly half as much as the competition’s. Analysts think the move could trigger a price war.”We are interested in serving customers,” Perez said in an interview. “They said they wanted a fair, low price for the ink because they want to print more and they want to print with freedom. What the other companies are going to do, I don’t know honestly, don’t care much.”Kodak’s latest job cuts will bring extra restructuring charges of $400 million to $600 million, or total charges of $3.6 billion to $3.8 billion since 2004.It is now eliminating 28,000 to 30,000 jobs by year-end, with 23,300 already axed. And the sale of its 111-year-old health unit, partly intended to help fund its $300 million-plus investment in inkjet, will strip another 8,100 jobs.That will shrink its payroll to around 29,000, its lowest level since the 1930s. It employed 64,000 people at the end of 2003 and 145,300 in 1988.Kodak said it expects to digital earnings from operations will reach $200 million to $300 million in 2007 on digital revenue growth of 3 percent to 5 percent.”By the end of the third quarter, basically my hope is that we’re done with all the announcements of restructurings and jobs and everything else and we’re just fully concentrated on growing” more than a dozen digital ventures from cameras and online photo services to high-volume printing presses, Perez said.While Kodak remains the world’s top maker of photographic film, Perez doesn’t discount someday discarding the storied business that George Eastman launched in 1881.”Film is going to follow its own destiny,” he said. “Right now, entertainment (motion-picture) imaging is very stable, is very good for the company. … If that goes digital, which eventually I believe it will, then we’ll do something else. We will do what’s better for the shareholders.”Kodak shares fell 70 cents to $25.99 in afternoon trading Thursday on the New York Stock Exchange.

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February 14, 2007 at 10:59 AM