Posted on 08/01/2006 6:56:48 AM PDT by t_skoz
Kodak posts wider 2Q loss of $282M
ROCHESTER, N.Y. - Eastman Kodak Co., undergoing a tough transition to digital photography, posted a wider loss of $282 million in the second quarter Tuesday — its seventh quarterly loss in a row.
Largely because of $214 million in restructuring costs, Kodak lost the equivalent of 98 cents a share in the April-June quarter, compared with a loss of $155 million, or 54 cents a share, a year ago.
Hurt by a rapid slide in film sales, revenues fell 9 percent to $3.36 billion from $3.69 billion in last year's second quarter.
Excluding one-time items, Kodak lost $54 million, or 19 cents a share.
As it drives for greater profitability from its digital businesses, Kodak said it is shifting manufacturing of its digital cameras to Flextronics Ltd. and transferring about 550 employees to the Singapore-based company.
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 the digital arena.
Its overall digital sales in the quarter rose 6 percent to $1.83 billion, while revenues from film, paper and other traditional, chemical-based businesses slumped 22 percent to $1.52 billion.
Profits from its digital businesses totaled $4 million, compared with a $25 million loss in last year's second quarter. In 2005, for the first time, Kodak generated more annual sales from digital imaging than from film-based photography and earned $161 million in digital profits.
The company reaffirmed that it expects to post an overall operating loss of $500 million to $850 million in 2006 and earn $350 million to $450 million from digital operations. But it lowered its forecast for digital sales growth to around 10 percent from a range of 16 percent to 22 percent.
"We are coming into the final stages of our digital transformation," said Kodak's chief executive, Antonio Perez. "By the end of next year the majority of the restructuring costs will be behind us and Kodak will be positioned for sustained success in digital markets."
A year ago, the 127-year-old company disclosed plans to lay off 10,000 employees on top of 12,000 to 15,000 job cuts targeted in January 2004. It has already cut 20,500 jobs, including 1,630 in the quarter.
In May, Kodak said it was exploring a partnership, an outright sale or other options for its Health Group, maker of X-ray film, medical printers and other health-imaging products and services. The division had revenues of $2.7 billion last year.
The company 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.
Film and photofinishing sales slumped to $1.15 billion from $1.5 billion a year ago while operating profits dropped to $113 million from $244 million.
Health imaging sales fell 6 percent to $655 million, and operating earnings dipped to $78 million from $109 million, partly because of costs associated with exploring alternatives for the 110-year-old business.
In contrast, graphic communications sales jumped 14 percent to $908 million, driven by its $1.8 billion buyouts of Canada's Creo Inc. and Sun Chemical Corp.'s 50 percent stake in Kodak Polychrome Graphics. Operating earnings reached $22 million, compared with a loss of $42 million a year ago.
Sad to hear about this news from my hometown of Rochester, but it's not surprising.
August 11th will be my 1 year anniversary of my move to New Hampshire. I should have done this years ago.
Best regards to all,
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Wow, they continue to lose money. They should have gotten on the ball faster. They identified plans to go all digital in 2003 and it will take them till 2007 to get there. A good example of a company moving too slow.
Good-morning yesterday...you wake up...and profits have slipped away...
Their digital cameras are selling well, but ultimately they need to expand their line to include SLRs if they want to be a player in this industy.
Regardless, the demise of film is going to continue to be a drag for some time.
They had Kodachrome, a wonderful film that they could command premium prices for. They stopped making it.
They had the K-14 process used for Kodachrome - they refused to license it to anyone else. Thus, pros went to E-6 process films because they could have it processed in less than 2 hours. Kodachrome took 2 weeks.
They have seemingly done everything they can to tick off the pros that are still using film, such as those doing 6x6cm (Hasselblad, Rolleiflex) and larger format film shooting.
Film is dying faster than I ever thought possible.
There are no more commercial users of film. (With the posssible exception of Hollywood.) High volume sales are a thing of the past. Without commercial sales, film production may simply cease.
It may be time to fill the freezer with 35mm film to go with the 127 and similar oddball sizes.
(Go Israel, Go! Slap 'Em Down Hezbullies.)
Film will endure as an "Art" market and as an archival medium for the indefinite future, but that's about it. Certainly nothing big enough to support a Dow-Jones sized company.
Take for example the Olympus FE-140, which is sold around US$160 street price. Good picture quality, built-in compensation for camera shake, and cheap memory cards (you can get a 1 GB xD memory card for around US$60 nowadays) are good reasons why everyone is wanting to get a digital camera anyways. Best of all, you can take the memory card and do the following: 1) copy it to your computer to archive the images either on the hard drive, on recordable CD's or DVD's or upload it to an image online storage site such as Imagebucket, 2) plug it into many printers and directly print pictures from the card or 3) go to a special kiosk found in many supermarket and drug stores and print the pictures on professional-quality paper.
Sure, film will still be around, but they will be primarily either slide film or medium format 6 x 4.5 cm or 6 x 7 cm print film (the medium formats will be used for magazine-quality professional photography).
They did. Actually Kodak was th pioneer in the field of digital slrs. Back in the early/mid ninties they had ~1 mp (nikon mount)slrs selling upwards of $20,000. In the 2000s they tried to catch up with the big fish (Canon/Nikon), but compared to the two their image qaulity was quite poor and weren't selling. A year or two ago Kodak moved out of the slr market for good.
As for chrome film, they were shunned by most pros in favor of Fuji for their higher grain and poorer color palette. I never liked Kodak myself after trying ektachrome once. I can't see what Kodak's strategy is after surrendering film and pro digital slrs.
While I'm not quibbling with these numbers I think it would be good to wait to compare them to FujiCorp, the world's other film giant. It may be that this is a trend that will continue until the switchover to digital is complete. The one big problem for Rochester is that while Kodachrome is made there, Kodak's new cameras are Asian produced. Profits for these new devices will stay in the US, sadly the jobs will not.
Kodak is one of the worst companies when it comes to supporting homosexual agenda and anti-family policies. Social conservatives like myself will always vote with our pocketbooks. If others want to support the liberal agenda then buying products from Kodak and Ford is almost the same as sending a check to Howard Dean.
Well, I bought a Kodak Digital and so far am pleased with it..... After having two Vivitars die on me in under a year....
I'd hate to see this company go under, they are photography.
Four years ago my brother and sister-in-law finally had a belly full of Buffalo and moved to Ohio. She is an MD and he is a college professor.
The State of New York and the federal government allowed them to keep almost fifty cents of every dollar they made.
Just keep raising taxes New York.
They obviously need to unload their US properties and focus on the inexpensive digitals. However, I do think they need to go into digital SLRs. Some of their high end non-SLR cameras are already pushing up against the price tag that would go with an SLR anyway. If they want to nurture their brand name, they need to appeal to serious amateurs who buy in the $500-$1000 range.
They ought to be positioning themselves to be taken over by someone like HP, though. HP has a camera line that really shouldn't exist. If they owned Kodak, they could improve on what they've already got, and be a player in that industry, while at the same time taking ought one of their main competitors.
"After having two Vivitars die on me in under a year.... "
Thats not really saying much - a vivatar is to the camera world as a yugo is to the car world.
Sad, from the inventor of the photo CD. Long before digital cameras.
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