Eastman Kodak Co said on Wednesday that it is cutting as many as 10,000 more jobs as the company that turned picture-taking into a hobby for the masses navigates a tough transition from film to digital photography.
Kodak, which earlier targeted 12,000 to 15,000 job cuts by 2007, made its shock announcement of more job cuts as it swung to a disappointing loss for the second quarter in a row. It missed Wall Street forecasts by a wide margin, largely because of a steady slide in revenues from film and other chemical-based businesses.
The company lost $146 million, or 51 cents per share, in the April-June quarter, compared with a profit of $136 million, or 46 cents per share, in last year's second quarter.
Sales grew 6 percent to $3.69 billion from $3.46 billion a year ago.
Excluding restructuring and research charges, plus asset impairments from an investment in Lucky Film Co., China's largest domestic film manufacturer, Kodak posted earnings from continuing operations of 53 cents a share.
Analysts surveyed by Thomson Financial had forecast earnings of 80 cents a share.
By 2007, "we will bring to an effective end the significant restructuring charges associated with the transformation and essentially complete the transition to our digital business model," said chief executive Antonio Perez.
"In that time, we intend to improve upon the success we are enjoying in digital markets."
As part of its effort to fortify its digital businesses to counter a faster-than-expected decline in consumer film sales, Kodak said it will cut deeper into its work force than it set out to do in January 2004.
It now plans to cut 22,500 to 25,000 jobs, and to reduce its traditional manufacturing infrastructure to about $1 billion down from $2.9 billion in January 2004. The restructuring is expected to be largely completed by the middle of 2007, and will shrink its work force to less than 50,000.
With the era of soaring sales and fat profits from silver-halide film now departed, Kodak expects digital technology to become its biggest source of revenue this year for the first time. In January, it wrapped up a nearly $3 billion shopping spree to expand its reach as a digital heavyweight in photography, medical imaging and commercial printing.
In the second quarter, sales of digital products and services in all its businesses rose 43 percent to $1.843 billion, helped by a sharp rise in sales of cameras, kiosks and thermal printers. But revenues on the analog side dropped 15 percent to $1.843 billion -- exactly in line with digital sales.
Kodak said its digital sales in June exceeded traditional revenues for the first time ever. Hurt by falling traditional sales in emerging markets such as China and India, Kodak now expects its traditional sales to plunge 23 percent to 27 percent in 2005, compared with a 20 percent drop forecast in April.
Health imaging sales rose 3 percent to $694 million, reflecting better-than-expected traditional sales. Graphic communications sales soared 144 percent to $794 million, largely because of Kodak's buyout this year of Sun Chemical Corp.'s 50 percent stake in a jointly owned commercial graphic arts business.
Digital accounted for around $5.5 billion of sales in 2004, but will vault as high as $8 billion this year, Kodak said. Chemical-based businesses will account for around $6.6 billion, down from $8 billion in 2004.
Kodak became a symbol of American ingenuity and one of the most recognizable brand names on Earth during the 20th century. But its film business has been on the wane for more than a decade, its decline quickened in the 21st century by filmless digital cameras, which record pictures on computer chips.
Analysts say Kodak was slow to get into digital photography and, without a swift conversion, risks fading into history.
Founded in 1881 by George Eastman, Kodak turned point-and-shoot photography into an overnight craze when it came out with a $1 Brownie camera in 1900. By 1927, it held a virtual monopoly of the US photographic industry.
By the 1980s, Kodak still had nearly two-thirds of color-film sales worldwide. But it was slow to exploit new markets, such as point-and-shoot 35mm cameras, enabling Tokyo-based Fuji to jump from obscurity 25 years ago to challenge Kodak for No. 1.
In 2003, digital cameras began outselling traditional film cameras for the first time in the United States.
