Kodak pins winning hopes on final straight

The losses are attributed to the $1.9 billion cost of the company's transformation into a digital products and printing services provider. Kodak is feeling the heat with shares falling by as much as nine percent to a two-year low, but has emphasized the results represent the first time the company has generated more sales from digital imaging than film-based photography.

The company's overall revenue rose by five per cent during the quarter, with its 20 per cent drop in traditional revenues offset by a 47 per cent increase in the sale of digital products and services. Kodak insists that a major chunk of its total digital revenue will be acquired in the final quarter of the year, reflecting both the seasonal market and acquisitions made earlier in 2005.

“Our performance in the last four months of this year will be critical to our full-year results. Due to the seasonality of digital markets, the company anticipates that 40 per cent of our total digital revenue and most of our earnings and cash for the year will come in the last four months of the year,” a company statement claimed.

“We are already at the mid-point of our transformation, and we are on track in our journey. Our goal is to create a strong, self-sufficient digital company by 2008.

Antonio Perez, CEO of Kodak, labels the third-quarter results as a milestone in the company's digital transformation, in spite of the $1.36 billion loss. Perez emphasizes the fact that digital earnings were three and a half times greater than those from 12 months ago, claiming the result boosts the company's confidence in a strong fourth-quarter showing.

“Within the business units, we continue to see widespread evidence of the success of our digital transformation. Our Graphic Communications Group continues to demonstrate strong growth, coming off a very successful Print 05 [Chicago] trade show in September,” claims Perez.

The third-quarter loss was the third in a row for Kodak, which has spent the past two years scaling back manufacturing and cutting jobs, as well as a number of high-profile acquisitions in the areas of digital and commercial print. Among these purchases were Creo, Encad, KPG and NexPress, with all of the company's graphic arts components brought together earlier in 2005 under its new-look Graphics Communication Group banner.