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Kodak Plans Job Cuts After Lower-Than-Expected 4Q Profit


Photo company will ax about 2,200 workers; company warns of a tough year ahead.

By The Associated Press
InformationWeek
January 22, 2003 12:00 AM

ROCHESTER, N.Y. (AP)--Photography icon Eastman Kodak Co. said Wednesday it will cut another 1,800 to 2,200 jobs, or about 3% of its global work force.

The cuts were announced as the world's largest photography company reported a profit for the fourth quarter that fell short of Wall Street's expectations and its chairman cautioned that economic conditions looked tough for the year ahead.

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Kodak earned $113 million, or 39 cents a share, in the fourth quarter compared with a loss of $206 million, or 71 cents a share, a year earlier.

Sales edged up 2% to $3.44 billion in the quarter from $3.36 billion a year earlier.

Excluding one-time items, earnings were $191 million, or 65 cents a share. That fell short of the consensus forecast of 68 cents a share by analysts surveyed by Thomson First Call.

For 2002, Kodak earned $770 million, or $2.64 cents a share, up from $76 million, or 26 cents a share, in 2001. Revenue fell to $12.8 billion from $13.2 billion a year earlier.

"While the economy constrained sales, profit rose as we cut costs, improved our manufacturing productivity and introduced a number of exciting new products," said chairman and chief executive Daniel Carp.

But he said in a conference call that while Kodak "had a good year in 2002, it's tough-looking going forward."

For 2003, Kodak estimated per-share earnings would be between $2.35 and $2.95. Analysts surveyed by Thomson First Call expect Kodak will earn $2.71 a share for 2003.

Carp pointed to continued soft film sales, partly from the rise of digital cameras, the threats of war with Iraq and terrorism and continued economic weakness.

Travel is down, and people staying close to home are using fewer rolls of film, he said.

"The only bright spot on the world economy I can see is Asia. It's heavily driven by China," Carp said. "China continues to be a great opportunity for Kodak," he said, adding most of its digital cameras are now built there, and production of one-time use cameras will follow.

The company eliminated 7,000 jobs last year, shrinking its work force to 70,000 people. The latest job cuts will stem from Kodak's photofinishing operations in the United States and western Europe, expected to save $35 million to $50 million this year, and eventually $65 million to $85 million.

Kodak controls about two-thirds of the U.S. film market but profits have been pinched by falling prices and a plunge in film sales dating back to August 2000.

Company executives predicted a decline of 4% to 6% in the U.S. film industry this year, but said Kodak's efforts in digital photography, while much smaller, should turn profitable.

Carp estimated 15% to 17% of U.S. households this year will have digital cameras, and the retail printing of digital pictures could become a major growth area for Kodak.

Kodak officials also announced Wednesday that it would pay a bonus to its U.S. workers of 7.15% of the employee's pay in 2002, compared with 2% a year earlier. The wage dividend will go to more than 28,000 Kodak employees nationwide.


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