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Kodak To Ax Up To 6,000 Jobs

The world's largest photography company blames the cuts on a sluggish economy and the rapid growth of digital picture-taking.
ROCHESTER, N.Y. (AP) -- Eastman Kodak Co. is cutting between 4,500 and 6,000 jobs, or up to 9 percent of its payroll, as it struggles to cope with a nearly three-year slump in film sales it blames largely on a sluggish economy and the rapid growth of filmless digital picture-taking.

The cuts were announced Wednesday as the world's largest photography company posted sharply lower second-quarter earnings of $112 million, or 39 cents a share, down from $284 million, or 97 cents a share, a year ago.

Excluding one-time items, however, earnings were $172 million, or 60 cents a share, sharply higher than Kodak's lowered forecast of 25 cents to 35 cents a share. That beat the consensus forecast of 29 cents a share among analysts surveyed by Thomson First Call.

Sales totaled $3.352 billion, unchanged from the second quarter of 2002.

The company eliminated 7,000 jobs last year, shrinking its work force to 70,000 people. In January, it said it was cutting another 1,800 to 2,200 jobs this year as it trims back photofinishing operations in the United States and Western Europe.

The latest cuts, which are to begin later this year, will be made in administration, manufacturing, and research with a special emphasis on paring overhead in the consumer film and professional film divisions, the company said.

In Rochester, where Kodak employs about 22,000 people, as many as 3,000 jobs will be eliminated, it said.

The company will take a charge of between $350 million and $450 million over the next year and expects to save $300 million to $400 million annually because of the cutbacks.

Kodak has already cast aside more than 10,000 employees since 2000 to offset heightened competition from Japanese rival Fuji, the rapid rise of digital photography and weak demand for film as consumers cut back on travel.

For the first time, Kodak acknowledged that the shift to digital cameras was affecting the company's consumer photography business--its bedrock and cash cow for decades.

"The performance of these businesses point to a fundamental shift at Kodak," said chief executive Dan Carp. "We are evolving from a historical film company into one that is aggressively pursuing the vast potential of digital imaging across all of our operations."

Eager to find new markets to compensate for the slump in sales of chemical-based film, Kodak said Monday it aimed to extend its reach in health imaging by buying PracticeWorks, a company that provides information technology systems for dental offices, for about $500 million.

In its photography division, Kodak said sales fell 2 percent to $2.34 billion even while sales of consumer digital cameras surged 65 percent. Health imaging sales rose 7 percent to $607 million and commercial imaging sales rose 6 percent to $382 million.

Year-to-date, Kodak has earned $124 million, or 43 cents a share, down from $323 million, or $1.11 in the first half of 2002. However, sales edged up to $6.09 billion from $6.04 billion.