Eastman Kodak Posts Loss of $37 Million
Tuesday October 31, 9:59 am ET
By Ben Dobbin, AP Business Writer
Eastman Kodak Posts Loss of $37 Million in 3Q - Eighth Consecutive Loss
ROCHESTER, N.Y. (AP) -- Eastman Kodak Co., scrambling to squeeze bigger profits from digital photography, posted a loss of $37 million in the third quarter Tuesday -- its eighth quarterly loss in a row.
But its earnings excluding one-time items beat Wall Street expectations, and its shares rose more than 4 percent in morning trading.
Hit with $202 million in restructuring costs, Kodak lost the equivalent of 13 cents a share in the July-September quarter. That compared with a year-ago loss of $914 million, or $3.18 a share, when it took a $778 million tax charge linked to its massive overhaul.
Sales fell 10 percent to $3.204 billion from $3.553 billion in last year's third quarter largely because of a slump in film sales.
Excluding one-time items, Kodak earned $130 million, or 44 cents a share. Analysts surveyed by Thomson Financial had forecast earnings of 19 cents a share on sales of $3.285 billion.
Its shares rose $1.01, or 4.3 percent, to $24.76 in morning trading on the New York Stock Exchange.
A photographic film icon during much of the 20th century, Kodak has struggled to turn profits even while becoming a major player in recent years in digital photography and printing.
In August, Kodak said it expected to post an overall operating loss of $500 million to $850 million in 2006 and to earn between $350 million and $450 million from digital operations. It also lowered its forecast for digital sales growth in 2006 to around 10 percent from a range of 16 percent to 22 percent.
On Tuesday, however, the company said it now expects digital revenue growth to fall somewhat below its 10 percent target because of its focus on margin expansion. "It's a focus on achieving profitable sales," said spokesman David Lanzillo.
The company that put film cameras into nearly every home in America is coming to the end of a third year in its historic, four-year makeover. In August, it axed 2,000 more jobs on top of 22,000 to 25,000 targeted since January 2004.
Kodak has accumulated $2 billion in net losses since it last posted a profit of $458 million in the third quarter of 2004. Since January 2004, it has racked up $2.6 billion in restructuring charges.
In the quarter, overall digital sales eased 1 percent to $1.79 billion, while revenues from film, paper and other traditional, chemical-based businesses slid 19 percent to $1.4 billion. But while profits from traditional businesses plunged 39 percent to $109 million from $148 million a year ago, profits from digital businesses jumped to $105 million from $7 million.
Film and photofinishing sales slumped to $1.07 billion from $1.35 billion a year ago while operating profits dropped to $139 million from $174 million.
Health imaging sales fell 6 percent to $597 million, and operating earnings tumbled to $68 million from $96 million because of higher silver prices and costs associated with exploring a partnership, an outright sale or other options for the 110-year-old business.
Graphic communications sales eased by $6 million to $880 million but operating earnings reached $31 million, up from $7 million a year ago.
Kodak acknowledged in 2003 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 the shutdown of film and other manufacturing operations 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.
On the Net: kodak.com
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