NEW YORK (Reuters) - Eastman Kodak Co EK.N on Thursday posted a better-than-expected quarterly profit on strong digital camera sales and said its restructuring might cost less than it had anticipated.
But shares in the photography company, which initially rose following the results, ended the session down 3.1 percent as analysts said Kodak continues to be overly dependent on declining film sales.
The company is undergoing a lengthy and expensive transformation into a maker of digital cameras and printing services.
“It was an OK quarter,” said analyst Shannon Cross of Cross Research. “Their challenge continues to be that the vast majority of profit comes from film, which is in secular decline.”
Kodak reported third-quarter net income of $37 million, or 13 cents a share, compared with a year-earlier loss of $37 million, or 13 cents a share.
Revenue fell 1 percent to $2.58 billion, as a decline in film sales offset growth in digital products, but still exceeded the analysts’ average forecast of $2.49 billion, according to Reuters Estimates.
Excluding special items such as restructuring charges, profit from continuing operations was 45 cents a share, nearly double Wall Street’s expectation of 23 cents, according to Reuters Estimates.
Analysts said the quarterly results were solid, but noted that the film unit contributed $122 million in profit, more than double that of all other segments.
Kodak shares closed down 90 cents at $27.76 on the New York Stock Exchange, but remain up about 7.6 percent so far in 2007, which Kodak has said will see the completion of its restructuring. The S&P 500 is up about 6.4 percent this year.
Kodak said revenue from digital products and services rose 12 percent to $1.59 billion, nearly offsetting a 16 percent fall in revenue from traditional photography products in the third quarter.
Since late 2003, the Rochester, New York-based company has focused on the expanding market for digital devices, hoping to outpace the drop in demand for film. At the same time, it has reduced costs by cutting jobs and trimming manufacturing.
Kodak said that as a result of manufacturing improvements, restructuring costs this year are likely to be in the range of $750 million to $850 million, lower than its previous estimate of $900 million to $1 billion.
In addition, it expects to spend less and cut fewer jobs than anticipated. It said the total restructuring plan would trim 27,000 to 28,000 positions, instead of 28,000 to 30,000, and charges will be $3.4 billion to $3.6 billion, instead of $3.6 billion to $3.8 billion.
Kodak said global revenue from digital capture and devices, including sales of products such as digital cameras, snapshot printers and revenue from licensing of its intellectual property, increased 18 percent.
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