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 user 2007-11-05 at 10:44:00 am Views: 49
  • #19246

    Kodak’s Move to Digital Shows Progress
    2007Eastman Kodak Co. swung to third-quarter profit on a 1% sales
    decline, in another sign its transition from high-profit film to
    digital photography and printing is creating a viable business.Much of
    the improvement was from reduced restructuring costs, as the Rochester,
    N.Y., company said it was able to transfer employees to suppliers or
    sell some operations rather than closing them, avoiding severance
    payments.”All the pieces are coming together, and we are delivering the
    objectives we set for ourselves,” said Kodak Chairman Antonio Perez.In
    4 p.m. composite trading yesterday on the New York Stock Exchange,
    Kodak’s shares fell 90 cents, or 3.1%, to $27.76. Analysts said
    investors remain concerned about Kodak’s reliance on profit from its
    film business. Its shares are up 7.6% this year.Ulysses Yannas, a
    broker for Buckman, Buckman & Reid, said, “The bulk of the
    restructuring is over. I like the trend. For many analysts, this is a
    dead company. But this is obviously not a dead company.”Kodak said
    sales of digital products rose 12% to $1.59 billion, accounting for 60%
    of revenue. The digital increase nearly offset the 16% decline in
    traditional film-based revenue.Mr. Perez said that for the full year,
    Kodak expects the revenue decline to be at the low end of its forecast
    of between 4% and 7% because of the strength of the digital business.
    He said Kodak is on track to sell 500,000 of its inkjet printers, as
    planned. Mr. Perez forecast the inkjet printers will account for $1
    billion in annual revenue by 2010.Revenue in the consumer digital
    business increased 1.3% to $1.12 billion as stronger-than-expected
    sales of digital cameras and retail print-making kiosks were offset by
    declines in photofinishing. Film revenue declined 18% to $488 million,
    led by a 32% drop in U.S. sales.Mr. Perez said Kodak also is looking
    for future growth from new technologies that are starting to appear in
    products. Next year it will introduce an advanced inkjet printer for
    the printing industry that is expected to provide cost and quality
    advantages over current digital-print technologies.

    Kodak Posts 3Q Profit Amid Restructuring
    November , 2007Eastman Kodak Co. (EK) swung to a profit in the third quarter amid higher margins and lower costs.
    Rochester, N.Y., camera and film company, reported net income of $37
    million, or 13 cents a share, compared with a year-earlier net loss of
    $37 million, or 13 cents a share. The results included 33 cents and 48
    cents a share, respectively, in charges, mainly related to

    Net sales fell 0.5% to $2.58 billion from $2.6 billion.
    mean estimate of analysts polled by Thomson Financial were for earnings
    of 27 cents a share against revenue of $2.49 billion.Digital sales rose
    12% to $1.59 billion, while more “traditional” revenue fell 16% to $986
    million in revenue.Gross margins were 26.4%, up 1.3 percentage points,
    while selling, general and administrative costs fell 8%.

    at Kodak’s digital imaging group rose slightly to $1.12 billion from $
    1.11 billion, as digital product sales rose 16% and traditional
    products fell 20%.
    Kodak is nearing the end of a four-year
    restructuring plan to wean itself from a more than century-old emphasis
    on its well-known film division. The overwhelming popularity of digital
    photography is undercutting film sales into niche status – not just
    among consumers, but businesses too, with the movie industry currently
    reformatting its theater screens and projectors from traditional film
    to that of digital specifications.As a part of its turnaround strategy,
    Kodak entered the consumer ink-jet printer market in February, with a
    particular emphasis on low-cost, high-quality ink cartridges for its
    printers. The company hopes that U.S. distribution deals recently
    signed with mass-market retailers such as Circuit City Stores Inc. (CC)
    and Wal-Mart Stores Inc.’s (WMT) Sam’s Club will boost sales
    further.Kodak also announced recently that, due to the marketing
    demands of digital technology, the company would end its status as a
    major sponsor of the Olympics after the Beijing Games in 2008. The
    company has been a charter member of “The Olympic Program” ever since a
    top tier of 12 sponsors – including Coca-Cola Co. (KO), McDonald’s
    Corp. (MCD) and General Electric Co. (GE) – was established in 1986.
    Kodak also helped support the first modern Olympics in 1896.