Kodak to Cut 10,000 Jobs; Will Take $1-Billion Charge
Eastman Kodak Co. said Tuesday that it will cut 10,000 jobs, almost 11% of its work force, and take a $1-billion pretax charge in the fourth quarter, the latest in a string of restructurings that have yet to boost the company’s profit.
Kodak also expects to lose $400 million this year in its digital-imaging business, which Chairman George Fisher championed as key to maintaining the company’s dominance. Another new effort, the advanced photo system, will report additional losses.
In addition to the job cuts, Kodak said it will sell or seek partners for some of its weaker digital product lines.
The 10,000 job cuts are the largest by any U.S. company this year, underscoring Fisher’s failure to develop high-tech products to increase revenue and push 113-year-old Kodak into the digital age. At the same time, the company has lost market share in its traditional business to Japan’s Fuji Photo Film Co.
Kodak’s shares fell $4.06 to close at $63.19 on the New York Stock Exchange.
The charge will reduce 1997 earnings by $2 a share. Half will cover job cuts and half the write-down of assets. Kodak had been expected to earn $3.47 a share, according to the average estimate of 18 analysts polled by IBES International Inc.
While Kodak didn’t say which businesses it plans to leave, it hinted that some product lines within its digital-imaging unit may be jettisoned.
The Rochester, N.Y.-based company will also reduce research and development spending by as much as $150 million next year and will consider hiring other companies to make more of its products.
“We are embarrassed by this year,” Fisher told analysts at a meeting in New York, where the restructuring was unveiled.
Fisher said the company will be more selective in how it runs its digital business and that he was “out of denial” about the company’s problems. He said he hopes to erase most of Kodak’s losses in digital imaging in the next two years, and he said that despite early troubles, that business holds great promise.
Fisher’s actions did little to appease investors, who have looked to him to revive fortunes at the top photography company since he took over four years ago.
Kodak in January said it would cut 4,000 jobs to consolidate photo labs. The company has about 95,000 employees.
Kodak’s third-quarter earnings fell 36%, the third straight decline in quarterly profit, largely because of problems in digital imaging. The business includes compact discs for computers that replace old-fashioned photo storage such as microfilm.
All this is a bitter disappointment to Kodak investors, who cheered when Kodak lured Fisher away from Motorola Inc. in 1993.
