*NEWS*KODAK POSTS LOSS OF $1.03BILLION

[Anonymous]

Kodak Posts Loss of $1.03 Billion
(Oct.05)
– Eastman Kodak Co., stung by a slide in film sales midway through its
painful shift from traditional photography to digital imaging, posted a
loss of $1.03 billion in the third quarter largely because of one-time
tax charges related to its massive restructuring.
Its shares sank
5.5 percent after Wednesday’s report to its lowest level in about two
years. Kodak shares dropped $1.26 to $21.88 in early trading on the New
York Stock Exchange.
Kodak said it lost the equivalent of $3.58 a
share in the July-September quarter, compared with a profit of $458
million, or $1.60 a share, a year ago.
Sales rose 5 percent to $3.55 billion, up from $3.37 billion in last year’s third quarter.
For
the first time, Kodak generated more quarterly revenues from digital
than from film, paper and other chemical-based products. But while
digital sales soared 47 percent to $1.89 billion, traditional revenues
slumped 20 percent to $1.66 billion.
The quarter included a non-cash
charge of $900 million, or $3.13 a share, for a valuation allowance
against net-deferred U.S. tax assets. That reserve was an accounting
requirement resulting from continuing losses created by its accelerated
overhaul.
The company’s loss from continuing operations, excluding one-time charges, was $103 million.
Kodak
warned last month that a sluggish economy and shortfalls in its
health-imaging business would likely crimp its digital profits this
year, forcing it to build fewer digital cameras and home printers for
the end-of-year holiday season. It had projected profits of around $275
million to $325 million.
Kodak is also battling a steep drop in
demand for photographic film and paper. In July, it disclosed plans to
lay off 10,000 employees on top of 12,000 to 15,000 job cuts targeted
in January 2004.
Sales of conventional silver-halide film – Kodak’s
cash cow for the last century – look set to drop by more than 30
percent in the United States this year.
In the third quarter, Kodak
benefited from a 20 percent jump in sales of digital cameras and a 45
percent surge in sales of home printers and accessories. Helped in part
by a reallocation of certain costs to its traditional business, its
digital profit rose to $10 million from $6 million a year ago.
“We
continue to see widespread evidence of the success of our digital
transformation,” said Kodak’s chief executive, Antonio Perez.
Health imaging sales eased 1 percent to $635 million, and operating earnings fell to $90 million from $106 million.
But
graphic communications sales nearly tripled to $886 million, helped in
part by its $980 million buyout of Canada’s Creo Inc., and operating
earnings were $15 million, compared with a loss of $16 million a year
ago.
Two years ago, Kodak acknowledged that its analog businesses
were in irreversible decline and outlined an ambitious strategy to
become a digital heavyweight in photography, medical imaging and
commercial printing by 2007.
The transition triggered nearly $3
billion in acquisitions but has carried a high cost. The shutdown of
film and other manufacturing operations around the world looks likely
to drop its global work force below 50,000, down from 75,100 in 2001
and a peak of 145,300 in 1988.

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October 19, 2005 at 10:59 AM