Eastman Kodak CEO Sees $24B Revenue By 2005
Dow Jones Newswires
NEW YORK -- Eastman Kodak Co. (EK) expects second quarter earnings to be $1.60 to $1.70 a share, and plans to accelerate its repurchase program to between $1 billion and $1.2 billion of Kodak stock for the rest of the year.
Kodak reaffirmed its expectations that full year earnings will be $5.50 to $5.80 a share.
In a press release Wednesday, the company said it intends to increase its daily purchasing activity for Kodak stock to $9 million and $10 million, from its current daily average of about $1 million.
In a separate release, Eastman Kodak President and Chief Executive Daniel A. Carp said the company expects to generate $24 billion in revenue by 2005, with 45% of its revenue and 27% of its earnings generated by digital products and services.
The continued growth in traditional products and the profits that are already generated from digital imaging will allow the company to invest further in digital imaging, and will allow it to meet its profit expectations.
The company added it expects "strong" free cash flow this year and to "significantly" grow its cash flows over the next five years.
Kodak anticipates $1.1 billion in free cash flow this year, and between $7 billion and $10 billion over the next five years, depending on the rate of digital conversion in its businesses.
The company said increasing its share repurchase program is the "best use" of free cash, in the absence of acquisition opportunities.
A First Call/Thomson Financial survey of 10 analysts estimated Kodak's earnings to be $1.65 a share for the second quarter, and $5.67 a share for the fiscal year.
Eastman Kodak said second quarter revenue is "on track" with Kodak's full year expectation of 6% to 7% growth, excluding currency impacts.
Kodak earned $491 million, or $1.52 a diluted share, in the second quarter of 1999 on revenue of $3.61 billion.
For the year ended Dec. 31, 1999, the company earned $1.62 billion, or $5.03 a share, excluding charges and credits. Revenue was $14.09 billion.
Regarding its projections, Eastman Kodak cited revenue growth in its Consumer Imaging business, its Digital & Applied Imaging business, and its Health Imaging and Entertainment Imaging businesses.
The company also cited lower costs from manufacturing productivity gains, purchasing efficiencies and reduced selling, general and administrative expenses, excluding advertising.
The share repurchase program was authorized under a $2 billion program announced in April 1999. Last year, Kodak repurchased about $925 million of its shares. So far in 2000, it bought back about $87 million in shares.
Kodak has about 309.8 million shares outstanding. New York Stock Exchange-listed shares of Eastman Kodak closed at 58 3/4 Tuesday, up 1/2, or 0.9%.
Eastman Kodak Co. intends to transfer itself to a "digital model" and plans to continue its traditional consumer area with the advanced photo system, build on the MAX brand, extend the distribution of one-time-use cameras and focus on category growth with concepts such as "everyday pictures."
The company also plans a joint venture with Hewlett-Packard Co. (HWP), and expects offerings from it to drive output growth.
Kodak expects "significant" growth by bringing photography to emerging` markets such as China and India.
The company's consumer digital imaging strategy involves partnerships with other companies to develop devices that connect to the digital environment.
The Health Imaging business expects to generate about 50% of its medical diagnostic revenue from digital products this year, while sustaining growth in traditional areas.
Assuming a slow consumer transition away from film-based images, Kodak expects to leverage its revenue and higher margin rates to hybrid and digital technologies from its film business.
If there is a rapid transition from film-based images, the company said it will benefit from higher revenue for digital products, higher returns on digital services and a lower-cost business model, all of which are expected to offset the loss of higher margin of film sales.
Company web site: kodak.com
-Sam Favate; Dow Jones Newswires; 201-938-5400
interactive.wsj.com@6.cgi?dukeofnuke/text/autowire/data/BT-CO-20000614-002104.djml/&NVP=&template=atlas-srch-searchrecent-nf.tmpl&form=atlas-srch-searchrecent-nf.html&from-and=AND&to-and=AND&sort=Article-Doc-Date+desc&qand=&bool_query=ek&dbname=%26name1%3Ddbname%26name2%3Ddbname%26name3%3Ddbname%26period%3D%3A720&location=article&HI=
*****************************
Good news.
Jack |
