Kodak has 2Q loss, ending consecutive up quarters
Robust inkjet printer sales and fewer charges narrowed Eastman Kodak Co.'s loss to $168 million in the second quarter, but its slumping film business cast a shadow over the photography pioneer's prolonged digital transformation.
Kodak's adjusted earnings fell short of Wall Street expectations as profit from traditional film-based products plunged 43 percent, squeezed in part by the economy's crimp in motion-picture film sales.
Snapping a run of two consecutive quarterly profits, the April-June period raised renewed concerns about Kodak's ability to make good on its painful digital transformation and shares slid hard when the market opened. The 129-year-old company has eliminated almost 50,000 jobs since 2002, and its work force of 20,300 is its smallest since the 1930s.
Sales dropped 11 percent to $1.57 billion from $1.77 billion.
Revenue from digital businesses fell 6 percent to $1.1 billion from $1.17 billion, dragged down by an 11 percent drop in sales of cameras, video cameras and other consumer products. Film-based revenue slid 21 percent to $466 million from $593 million as earnings from operations fell to $29 million from $51 million.
Kodak said it lost the equivalent of 63 cents a share in the second quarter. That compared with a loss of $189 million, or 70 cents per share, a year earlier.
Excluding restructuring and tax-related charges of $31 million, or 11 cents a share, Kodak said it lost $136 million, or 51 cents per share. That compares with $75 million in one-time charges in last year's second quarter.
Analysts polled by Thomson Reuters, whose estimates typically exclude one-time items, expected Kodak to lose 32 cents per share on sales of $1.69 billion.
When the market opened, the company's stock tumbled 8 percent, or 40 cents, to $4.53. The stock is trading at the lower end of its 52-week range of $2.87 to $9.08 a share.
Revenue from consumer inkjet printers and ink swelled by 50 percent in the quarter and sales in its commercial printing businesses grew 9 percent.
Kodak aims to begin drawing profits in 2011 from consumer inkjet printers, having doubled sales to more than 2 million units last year. It expects its commercial inkjet systems to become profitable in 2012.
The company is relying on lower costs, royalties from digital-camera inventions, and rapidly shrinking but still high-margin film revenue as it battles to remake itself.
After a $3.4 billion turnaround from 2004 to 2007, Kodak's momentum was stalled by the economic downturn.
It ran up four quarterly losses before turning profitable again in the last three months of 2009. But its $119 million profit in the first quarter was produced by a one-time, $550 million settlement deal with Samsung Electronics Co. over disputed digital-imaging technology.