Kodak Swings to a Q2 Profit on Growing Digital Strength

Eastman Kodak swung to a second-quarter profit of $592 million ($2.06/share), after losing $282 million (-$0.98) a year ago, boosted by lower costs and strong digital earnings. Net sales at the world's number-one photography company fell 6.6% to $2.51 billion from $ 2.69 billion in Q2 2006. Film products sales fell 15%, while digital imaging sales dropped 11%. The company reaffirmed its 2007 guidance: Earnings from continuing operations $150-250 million, digital revenue growth of 3-5%, and overall revenue decline of 4-7%. CEO Antonio Perez plans to return the company to ongoing profitability by 2008, and has spent $2.7 billion while cutting more than 23,000 workers in a major corporate restructuring effort. CEO Antonio M. Perez: "The performance of our business units this quarter is more evidence of the progress that we are making in positioning Kodak for sustainable success." (See full earnings call transcript later today.) This year the company introduced a new line of inkjet printers, and is working to improve picture quality on its digital cameras. "For 100 years they were a film company, and the leaders had to drag all the divisions into the digital age kicking and screaming," analyst Barry Ritholtz told Bloomberg. "That transition is finally nearing an end." Shares are up 16.2% over the past year.

Sources: Press release, Dow Jones, Bloomberg
Commentary: Kodak Moment: Free Cash Flow Potential Makes EK A Buy At Current Levels • Eastman Kodak's On The Road To Recovery • Kodak Jumps 8% on New Image Sensor Technology, Analyst Upgrades
Stocks/ETFs to watch: EK. Competitors: FUJI, CAJ, SNE
Earnings call transcript: Eastman Kodak Q1 2007

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