News

Kodak cuts in half profit estimate for Q2

June 18, 2003

ROCHESTER, N.Y. -- Every time it seems as if 2003 cannot get worse for the Eastman Kodak Company, it does, according to an article in The New York Times.

The persistently sluggish economy coupled with the inexorable migration of photographers to digital cameras has been steadily whittling away at its domestic and European sales. Kodak said that the SARS epidemic in Asia had decimated its sales in China, one of the company's few bright spots until now.

A result, Kodak said, is that its second-quarter earnings from continuing operations will be 25 to 35 cents a share, less than half the 60 to 80 cents the company forecast in April and a far cry from the 68 cents that analysts were predicting, the article said.

Yesterday was the third time this year that Kodak, which is based in Rochester, has pulled back on earnings forecasts, and investors punished the stock, sending shares down $3.22, or 10 percent, to $28.77.

"The SARS outbreak, as well as concern about geopolitical tensions, is keeping people from participating in activities that foster picture-taking," Daniel A. Carp, Kodak's chairman, said in a statement.

Indeed, Kodak's sales of film in China were down 50 percent in April and May compared with the months a year earlier, and analysts said June sales were looking even worse.

Kodak has also floundered in its attempts to wring profits from digital photography, according to the article. Recently, Kodak and Hewlett-Packard dissolved Phogenix, their joint venture to make prints from digital cameras, in part because the technology never worked properly, the article said.

The worst may be over for Kodak, however. Kodak has fleshed out its portfolio of digital products. It has introduced several inexpensive digital cameras, and it has fine-tuned its Web pages and software to make it easier for even the rankest of amateurs to download images from a digital camera and have them printed, the article said.

It recently acquired Applied Science Fiction, which makes self-service kiosks where customers can turn a roll of film into prints in less than 10 minutes. See related story, "Kodak buys Applied Science Fiction's assets; key to photo kiosks."