Kodak to cut up to 4,500 jobs
NEW YORK (Reuters) - Eastman Kodak Co posted a sharp quarterly loss and said it would cut up to 4,500 jobs this year after suffering a dramatic decline in demand for digital cameras and commercial printing equipment.
The report sent shares of Kodak down 25 percent to a historical low, making the company one of the biggest percentage losers on the New York Stock Exchange on Thursday.
The maker of cameras, picture frames and consumer printers and provider of commercial printing services, also plans another round of restructuring to cut costs, the latest in a string of such moves dating back to at least 2003.
About a year ago, Kodak said it had completed an expensive four-year restructuring that transformed it into a maker of digital photography products and printers. During that restructuring, Kodak halved its workforce, which now stands at about 26,900 people.
The company said on Thursday it would reduce its workforce by between 3,500 and 4,500 positions in 2009. Kodak late in 2008 had earmarked 1,000 to 1,500 jobs to be cut in 2009, and on Thursday said an additional 2,000 to 3,000 jobs will be cut.
Standard & Poor's Equity Research Analyst Erik Kolb questioned if Kodak's cost cuts would be deep enough, and wondered what strategy it can dream up to spur sales.
"They were late to the game in their shift to digital and they have been playing catch-up since," he said. "Now, given the deterioration of consumer spending trends, they are still struggling to turn the business away from film sales."
Since late 2003, Kodak has focused on the expanding market for digital devices and services, hoping to outpace the drop in demand for film. But the economy has soured, and consumers are scaling back on vacations and other events that typically spur use of photography services.
Its fourth-quarter loss from continuing operations was $137 million, or 51 cents per share, compared with a year-earlier profit of $215 million, or 75 cents per share. Kodak called the results preliminary because additional asset-related charges may be recorded for the period.
Excluding special items such as restructuring and legal costs, Kodak's loss was 8 cents a share, far short of analysts' expectations of a profit of 19 cents a share, according to Reuters Estimates.
Revenue fell 24 percent to $2.43 billion. Sales of products like still and video cameras and digital picture frames fell 36 percent.
"During the last three months of the year, we experienced dramatic declines in several of our key businesses due to the slowdown in consumer spending and significantly reduced demand for capital equipment," Chief Executive Antonio Perez said in a statement.
The Rochester, New York, based company's new restructuring aims at "rationalizing selling, administrative, research and development, supply chain and other business resources in certain areas and consolidating certain facilities." In addition, it will waive wage increases in 2009.
In all, the moves are expected to save Kodak $300 million to $350 million a year.
It expects to take charges in the range of $250 million to $300 million for the restructuring, which is expected to take place primarily in the first half of 2009.
Analyst Shannon Cross said Kodak spent about $139 million on dividend payouts in 2008, adding that the dividend "must be at risk... given the substantial pressure on operating cash flow." But despite its desire to cut costs, a spokesman for Kodak said it has no plans to change its dividend.
Shares of Kodak fell $1.78 to $5.29.
(Reporting by Franklin Paul; Editing by Steve Orlofsky and Derek Caney)