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Chief Executive of Kodak to Step Down

May 12, 2005|From Reuters

Eastman Kodak Co., the camera and film company undergoing a difficult transition to digital products, said Wednesday that Chief Executive Daniel Carp would step down in June and be succeeded by Kodak's president, who has a background in digital gadgets.

Carp, 57, was credited with setting the once-stodgy film company on the path to becoming a digital photography powerhouse, cutting 15,000 jobs and slashing the company's dividend. But he also was criticized for not recognizing the necessity of such moves sooner.

Analysts said the incoming CEO, Antonio Perez, 59, had been integral in planning Kodak's turnaround strategy since he was picked by Carp in April 2003 after 25 years at leading printer maker Hewlett-Packard Co., and may be better suited to implement the next stages of Kodak's plans.

Carp, who joined Kodak in 1970 as a statistical analyst, became CEO in January 2000 and chairman in December 2000. He will remain chairman until he retires in January, when Perez will add that title.

"We are not surprised by this move -- he wasn't just the deputy carrying out Carp's vision, he was part of the vision," said analyst Jamelah Leddy of McAdams, Wright, Ragen Inc. "[His] digital focus is what Kodak needs and he has the background ... and drive to effectively lead Kodak through its transition to becoming a digital company."

It will not be easy, analysts said.

"Antonio will be faced with the same challenges that Dan Carp is facing," analyst Shannon Cross of Cross Research said. "Nothing fundamentally has changed at Kodak. Secular declines in a lot of their businesses will be the same on Jan. 1 when Carp is gone."

Many of those concerns bubbled to the surface in Rochester, N.Y.-based Kodak's first-quarter results. It posted $142-million loss, hurt by a faster-than-expected decline in traditional film sales, prompting Moody's Investors Service and Standard & Poor's to cut Kodak's debt ratings to "junk." Junk status can significantly raise a company's borrowing costs.

Perez's experience, including a stint as president of Hewlett-Packard's consumer and inkjet printer businesses, fits well with Kodak, which has gained market share with its digital cameras and small, companion printers. Kodak hopes to expand into inkjet printing.

In a statement, Carp said he had recruited Perez to be his successor, adding: "That day has now come. It is time for me to turn over the reins to Antonio, who has contributed so much to Kodak in such a short time."

Shares of Kodak rose $1.13 to $26.58 on the New York Stock Exchange.

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