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Kodak Slashes Dividend To Help Fund Expansion To Digital Market

The company expects to spend as much as $3 billion on product development and acquisitions to enter non-photographic areas.

Eastman Kodak Co. said Thursday that it will slash its dividend to 50 cents from $1.80 a share to help fund an overhaul that's moving the company into digital markets from its traditional film and photography business.

Kodak said it expects to spend as much as $3 billion on product development and acquisitions to enter non-photographic areas, including commercial and consumer printing, digital cameras, and medical imaging. The shift puts Kodak in direct competition with Canon, Hewlett-Packard, Seiko Epson. and Xerox.

Kodak predicted the multi-billion-dollar cost of revamping its business would generate $16 billion in revenue by 2006 and $20 billion by 2010.

As part of the overhaul, Kodak's board voted to cut its semi-annual dividend payments to 25 cents from 90 cents, payable Dec. 12 to shareholders of record as of Nov. 3. The company said the move was necessary to take the cash generated by its traditional businesses and spend it on restructuring.

"We are acting with the knowledge that demand for traditional products is declining, especially in developed markets," Daniel A. Carp, Kodak chairman and CEO, said in a statement. "Given this reality, we are moving fast-as digital markets demand-to transform our business portfolio, with an emphasis on digital commercial markets."

In its struggle to adapt to consumers' shift to digital technology, Kodak said in August that it was reorganizing its business units and placing an executive with digital experience in charge of each division.

To achieve its revenue goals, Kodak said that over the next two years, it would cut costs and manage its consumer and paper businesses for cash and manufacturing share. In the two- to five-year timeframe, the company plans to use the cash generated from traditional businesses to strengthen its position in targeted markets.

Beyond five years, the company said it would expand its brand and technology into other new markets, such as commercial workflow management, mobile imaging and flat-panel and flexible film displays.

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