Kodak posts fourth straight quarterly loss

By BEN DOBBIN AP Business Writer

ROCHESTER, N.Y. (AP) - Eastman Kodak Co. lost money for a fourth straight quarter and missed Wall Street expectations but struck a more-confident note Thursday that its photography and printing businesses are rebounding from their worst levels during the economic downturn.

The photography pioneer recorded a loss of $111 million, or 41 cents a share, in the third quarter, compared with a profit of $101 million, or 35 cents a share, a year earlier. Sales tumbled 26 percent to $1.78 billion from $2.41 billion, missing analysts' forecast of $1.89 billion.

While the July-September period illustrated the difficulties still facing Kodak as consumers hold off on purchases, the company said it was especially encouraged by robust sales of its consumer inkjet printers as well as rising orders for commercial inkjet printers that hit the market early next year.

Kodak lost $189 million in the second quarter and $353 million in the first quarter.

"On a sequential basis, the positive trends are clear," said CEO Antonio Perez. "Our sales are stabilizing and some businesses are showing real signs of growth in the fourth quarter.

"That, combined with operational improvements in several of our key product lines, increases our optimism for significant improvement in the fourth quarter, our largest quarter of the year."

Sales of its consumer inkjet hardware and ink products more than doubled in the quarter, while customer commitments for its Prosper commercial printers "continue to grow rapidly," Perez said.

In 2009, Kodak aims to double to more than 2 million the number of inkjet printers sold to consumers. Yet that business isn't expected to become profitable until 2011.

Kodak said it generated $29 million in cash before restructuring payments as opposed to burning up $78 million in cash in last year's third quarter. It expects to generate most of its cash during the fourth quarter when it traditionally benefits from a bump in holiday season sales.

The third quarter included charges and gains of $48 million, or 18 cents a share, mainly related to restructuring, asset sales and taxes. Excluding these items, Kodak lost $63 million, or 23 cents a share. On that basis, analysts surveyed by Thomson Reuters expected a loss of 19 cents per share.

Revenue from digital businesses plunged 26 percent to $1.21 billion and traditional film-based revenue fell 25 percent to $572 million.

For the full year, Kodak now expects its total revenue decline rate to be at the high end of a previously forecasted range of 12 percent to 18 percent. That is due in part to results so far this year and the company's increased focus on cash and earnings, it said.

Based on 2008 sales of $9.4 billion, that suggests sales of $7.7 billion to $8.3 billion. Analysts on average expect sales of $7.32 billion.

Kodak has drastically cut costs as it undergoes a costly transition from film to digital-imaging products.

Switching the bulk of its business to electronic technologies cost Kodak $3.4 billion from 2004 through 2007, when it pared its global payroll from 64,000 to 26,900. It is shedding 3,500 to 4,500 jobs this year, shrinking its work force to around 20,000 from a 1988 peak of 145,300.

Its consumer digital-imaging division absorbed an $89 million operating loss in the quarter compared with a year-ago profit of $24 million as sales slumped 35 percent to $535 million.

Hurt by a softer commercial-printing market, the graphic-communications division's operating profit dipped to $10 million from $18 million as sales fell 18 percent to $674 million.

The film, photofinishing and entertainment unit had an operating profit of $47 million, down from $77 million a year earlier.

Kodak shares slipped 10 cents to $3.37 in morning trading. The stock is trading near the low end of its 52-week range of $2.01 to $11.74.

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