Eastman Kodak Company is feeling the pressure of the digital market, and has announced an acceleration of its strategy to increase its revenue from digital products and services by 36% in 2005, with an expected value between US$275 million and US$325 million.
Even though the company expects an increase of digital products and services in the overall revenue, the second-quarter 2005 revenue totaled US$3.686 billion, up 6% from the year-ago quarter. The net loss (GAAP) was 51 cents per share, primarily reflecting charges associated with the previously announced restructuring of Kodak's traditional infrastructure, in-process research and development charges related to acquisitions, and an asset impairment charge relating to an investment in Lucky Film company. Earnings from continuing operations, excluding non-operational items, were 53 cents per share.
Kodak have previously announced they would stop the manufacturing of black and white photo paper.
As part of the effort to accelerate its digital transformation and to respond to a faster-than-expected decline in consumer film sales, Kodak will extend the restructuring activity originally announced in January 2004, in which the company set plans to reduce employment worldwide by as many as 15,000 positions.
The company now plans to increase the total employment reduction to a range of 22,500 to 25,000 positions, and to reduce its traditional manufacturing infrastructure to approximately US$1 billion, compared with US$2.9 billion in January 2004. The proposed actions should be completed by the middle of 2007.
"Kodak is a company with product portfolios that are proceeding on two very different tracks," said Antonio M. Perez, Chief Executive Officer and President, Eastman Kodak Company. "As sales of our traditional consumer products and services decline faster than anticipated, we are moving more aggressively to reduce cost. At the same time, we continue to make significant progress growing the sales and earnings of our digital portfolio. Second-quarter digital sales, for example, increased 43%, and we made significant progress in improving our digital earnings."
"In 24 months, as a result of the actions announced today, we will bring to an effective end the significant restructuring charges associated with the transformation and essentially complete the transition to our digital business model," Perez said. "In that time, we intend to improve upon the success we are enjoying in digital markets. In June, for example, our digital revenue exceeded our traditional revenue on a monthly basis for the first time ever, paving the way for us to achieve the full-year goal of having digital revenue surpass traditional revenue. Kodak is a different company that's becoming a stronger digital player each day."
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