Kodak Remains Optimistic in the Face of Continual Losses

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October 19, 2005 - In the face of poor stock performance, the ire of the entire town of Greece, NY, and thousands of cut jobs, which Kodak estimates will reach a worldwide total of between 22,500 and 25,000 by 2007, it is almost needless to say that the company as a whole is not doing well. Even the combined net sales from Kodak’s self-professed hottest major emerging markets—China, Hong Kong, Mexico, Brazil, Russia, Korea, India, and Taiwan—are down 2 percent from the 2004 third quarter to $721 million from $736 million. But digital sales leapt up 47% compared with last year’s third quarter, and Eastman Kodak CEO and president Antonio M. Perez remains optimistic about Kodak’s future.

"In the third quarter, our digital revenue exceeded our traditional revenue for the first time on a quarterly basis, representing another milestone in our digital transformation," said Perez.

Digital earnings were $10 million from last year’s third quarter earnings of $6 million, though compared with Kodak’s overall $1.029 billion loss, it seems like a drop in the bucket. However, much of this loss reflects costs associated with restructuring. Actual sales are up 5 percent, $3.53 billion from $3.374 billion, and Kodak’s earlier acquisition of Creo this year seems to have been a smart move. Perez also credits their EasyShare-one, the first Wi-Fi camera announced to consumers, for bringing in revenue and being responsible for the 20% improved sales in consumer digital capture equipment.

Perez also emphasized that the year was not over, adding that "We anticipate that more than 40% of the company's total digital revenue in 2005 will occur in the last four months of the year, reflecting the seasonality common to digital markets and the company's acquisitions earlier this year. As those sales occur, we will enjoy increased digital earnings."

Considering Kodak’s popularity with many, there is no reason to doubt Perez—although earlier last month, Kodak had to adjust an estimate for their digital imaging revenue, stating that they would not each their target range of $275 million to $325 million. Perez did comment that the company’s transition from a film focus to a digital imaging one would be "uneven."

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