[PRCo] Kodak

[Jim Holland]

This has been mentioned here before -- Digital vs. Film:::::::



"""Digital PROFITS--[emphasis added] surged to $82 million from $28 
million..."""


  Eastman Kodak Posts 3Q Profit, Sales Dip

By BEN DOBBIN, AP Business Writer

Thursday, November 1, 2007

(11-01) 14:42 PDT Rochester, N.Y. (AP) --

Eastman *Kodak* Co., rounding the final bend in a four-year digital 
overhaul, swung to a $37 million profit in the third quarter Thursday as 
digital revenue almost tripled and wider profit margins overshadowed a 
slight drop in overall sales.

The photography products maker earned the equivalent of 13 cents a share 
in the July-September quarter, mirroring a loss of $37 million, or 13 
cents a share, a year earlier when it also took hefty charges.

Sales eased to $2.58 billion from $2.60 billion in last year's third 
quarter.

Excluding one-time restructuring costs of $96 million, or 33 cents a 
share, operating profits came to $128 million, or 46 cents a share. On 
average, analysts surveyed by Thomson Financial forecast a profit of 27 
cents a share on sales of $2.49 billion. The earnings estimates 
typically exclude one-time items.

*Kodak* shares fell 90 cents, or 3.1 percent, to close at $27.76 Thursday.

Digital profits surged to $82 million from $28 million as sales rose 1 
percent to $1.123 billion. In contrast, earnings from film, paper and 
other traditional, chemical-based products slumped from $110 million to 
$91 million as sales plunged 16 percent to $986 million.

*Kodak* said gross profit margin rose to 26.4 percent for the quarter, 
compared with 25.1 percent a year earlier. It also reported a lower debt 
level of $1.63 billion at the end of the quarter versus $2.78 billion at 
the end of 2006.

"In my view, all the pieces are coming together," *Kodak*'s chief 
executive, Antonio Perez, said in a conference call with analysts. "We 
have created with all this work a much more cost-effective business 
model .... from which I believe we can launch and sustain profitable 
growth."

Ulysses Yannas, a broker with Buckman, Buckman & Reid in New York, 
thinks *Kodak*'s transformation is "coming to a successful end" with 
increasingly profitable digital businesses "now taking over from film. 
They've survived the restructuring not as a second-rate company but as a 
first-rate company. That's the important part."

But analyst Shannon Cross of Cross Research in Short Hills, N.J., 
cautioned that operating profits in the quarter were driven by 
"leveraging cost-cutting in the film business" and one-time royalty 
payments from digital-camera technology.

"It's still difficult to determine what the long-term, core operating 
profit of this company will be because ... we're not going to really 
know for a couple of years the scope of the investments they're making 
right now in things like inkjet printers and CMOS (image sensors in 
digital cameras)."

The company reiterated its guidance for 2007 operating earnings of $300 
million to $400 million.

In 2003, *Kodak* acknowledged its analog businesses were sliding 
irreversibly and outlined a strategy to become a digital front runner in 
photography and commercial printing by 2008. It embarked on a nearly $3 
billion shopping spree but also began closing film, paper and other 
raw-materials plants around the world.

Shifting from a shrinking film business into the highly competitive 
digital arena has proved costly. *Kodak* has piled up nearly $3.3 
billion in restructuring charges and accumulated $2.1 billion in net 
losses over the last 12 quarters — nine of which ended in deficits.

In February, the photography pioneer said it was eliminating 3,000 more 
jobs, raising its planned tally of layoffs to 28,000 to 30,000 since 
2004. But the company said Thursday that the layoff count will actually 
end up between 27,000 and 28,000.

By year-end, its work force could slip to around 34,000, less than half 
what it was at the end of 2002.

Revenues from consumer digital imaging products rose 1 percent in the 
quarter to $1.23 billion, helped by a 16 percent jump in sales of 
cameras, retail kiosks and other digital products but offset by its 
costly foray into a high-margin inkjet-printer market dominated by 
Hewlett Packard Co. *Kodak* is aiming to sell a half-million inkjet 
printers this year and reach $1 billion in sales by 2010.

Graphic communications revenues rose 5 percent to $928 million, driven 
by improved sales of digital plates and software.

In the first nine months of the year, *Kodak* earned $461 million, or 
$1.60 a share, compared with a loss of $617 million, or $2.15 a share, 
in the first three quarters of 2006. But sales fell to $7.2 billion from 
$7.57 billion — reflecting the $2.35 billion sale in April of its 
110-year-old health-imaging business.

___

On the Net:

http://tinyurl.com/24uskl
*
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http://www.*kodak*.com <http://www.kodak.com>



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Jim Holland
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Studying Pittsburgh Railways Company (PRCo)
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..............................From 1930 -- 1950
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Pennsylvania Trolley Museum (PTM)
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http://www.pa-trolley.org/
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N.M.R.A.
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http://www.nmra.org/