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Kodak to slash 3,000 more jobs

The company has been struggling as it shifts its focus from film to digital photography.

February 09, 2007|From the Associated Press

Eastman Kodak Co. is eliminating 3,000 more jobs this year as the picture-taking pioneer wraps up its wrenching transformation into a digital-imaging company focused on consumer photography and commercial printing.

By year-end, its workforce will slip below 30,000, less than half what it was three years ago. On top of 27,000 layoffs already targeted, Kodak said Thursday that it was reducing its payroll even further to accommodate the $2.35-billion sale in January of its health-imaging unit and its costly foray into a high-margin inkjet printer market dominated by Hewlett Packard Co.

"The dream was that we would wake up in 2008 with the digital company that we want to have. We're still right on that track," Chief Executive Antonio Perez said at a meeting with analysts and institutional investors. "We will finish this year. This is done.... This is the last year of restructuring."

The Rochester, N.Y.-based company, which put film cameras into nearly every home in America, acknowledged in 2003 that its analog businesses were in irreversible decline. It outlined a strategy to invest in new digital markets governed by HP, Seiko Epson Corp. and Canon Inc.

As it battled to outrun sliding demand for film, Kodak embarked on a nearly $3-billion shopping spree that resulted in $2 billion in net losses over eight quarters. It finally realized a profit -- $16 million -- in the October-December period when for the first time it earned more from digital than from film, paper and other chemical-based products.

"As far as I'm concerned, Kodak is finally over the negative surprises," said Ulysses Yannas, a broker with Buckman, Buckman & Reid. "They are entering a phase where increasingly profitability starts to show.

"A year or two out from here, it will be a totally different company," he said, with profits driven by an inkjet printer system that "probably is a lot bigger than anybody thinks it's going to be."

Kodak unveiled a trio of home printers Tuesday that produce documents and photos using ink cartridges that cost roughly half as much as the competition's. Analysts think the move could trigger a price war.

Kodak's latest job cuts will bring extra restructuring charges of $400 million to $600 million, or total charges of $3.6 billion to $3.8 billion since 2004.

It is now planning to eliminate a total of 28,000 to 30,000 jobs by year-end, with 23,300 already axed. And the sale of its 111-year-old health unit, partly intended to help fund its $300-million-plus investment in inkjet printers, will strip an additional 8,100 jobs.

That would shrink its workforce to about 29,000, its lowest level since the 1930s. It employed 64,000 people at the end of 2003 and 145,300 in 1988.

Shares of Kodak fell 69 cents Thursday to $26.

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