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Kodak to Cut Management by 20%; Consolidate Plants

September 26, 1997| From Bloomberg News

Eastman Kodak Co. said it will trim its management ranks by about 20% and consolidate assembly plants as Chairman George Fisher cuts costs in response to the deepest crisis in his four-year tenure.

Kodak also will reduce its general and administrative staff by at least 10% in the first tangible moves since the photography company announced last week that third-quarter profit may be half that of the year-ago period. The company said it will review as many as 200 businesses to determine which ones to exit.

Rochester, N.Y.-based Kodak plans to slash costs by about $400 million a year to better compete with the price war begun by rival Fuji Photo Film Co. and free up money to invest in new photographic technologies, analysts said. Unless Kodak acts fast, it won't have the financial muscle to stem market share loss to Fuji and keep pumping money into digital imaging, they said.

"They can't afford to waste any time," said Rebecca Runkle, an analyst at Morgan Stanley, Dean Witter, Discover & Co.

Thursday's cuts are just the start. Some investors and analysts expect Kodak to take $1 billion in charges this year to cut at least 10,000 jobs as the company struggles with stiffer competition, sluggish sales and declining profit.

Kodak, which also said last week that next year's operating profit may be as much as 25% below last year's results, declined to comment on analysts' expectations. Kodak shares rose 81 cents to close at $62.44 on the New York Stock Exchange.

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