ROCHESTER, N.Y. - The digital revolution did away with 40,000 jobs at Eastman Kodak Co. over the last five years.
The global recession is reducing the photography icon's ranks still further to around 20,000, a level not seen since the Great Depression.
Kodak said Thursday it lost US$137 million in the fourth quarter on plunging sales of both digital and film-based photography products. It plans to eliminate 3,500 to 4,500 jobs, or 14 per cent to 18 per cent of its work force, in 2009.
Its stock lost more than 27 per cent of its value, sinking $1.96 to a decades-long low of $5.11 in afternoon trading.
Its loss in the October-December period amounted to 51 cents a share. That compares with a year-ago profit of $215 million, or 75 cents a share.
Sales slumped 24 per cent to $2.43 billion, hit by a sharp slowdown in demand not only for chemical-based film and paper but a new world of electronic-imaging products from cameras, picture frames and inkjet printers to retailer kiosks and high-speed commercial presses.
Excluding restructuring charges and one-time items totaling $112 million, or 42 cents a share, the loss came to $21 million, or 8 cents a share. Analysts surveyed by Thomson Reuters expected, on average, a profit of 21 cents a share on higher sales of $2.81 billion.
Digital revenue dropped 23 per cent to $1.78 billion and traditional film-based revenue fell 27 percent to $652 million.
"Consumer digital was a disaster area -- it's the economy, unquestionably," said Ulysses Yannas, a broker for Buckman, Buckman & Reid in New York. "Long-term, I'm not gloomy about this company but it's suffering a helluva lot of pain.
"There was a point when Kodak had too many people. Now it's going the other way, shedding the bulk of manufacturing" as it turns into "an intellectual property and marketing operation. I don't see that there's any fat left, which says that when and if this thing turns around, you're going to have a wild ride."
Converting the bulk of its business from high-margin film to more competitive digital technology cost the picture-taking pioneer $3.4 billion from 2004 through 2007. It chopped its global work force from 64,000 to 24,400 at the end of 2008, with about two-thirds of its 12,800 U.S. employees based in Rochester.
The latest cuts could trim its payroll to a 1930s-era low of 19,900 from a peak at 145,300 in 1988.
"The second half of 2008 will go in the history books as one of the most challenging periods we have seen in decades," Kodak's chief executive, Antonio Perez, said in a conference call with analysts.
"Before the dramatic shift during the last four months of 2008, we had created significant momentum in our digital portfolio and were in a very strong growth mode. I'm confident that when the economy recovers -- although unfortunately I can't tell you when -- we will be able to create that momentum once again."
After accumulating more than $2 billion in losses over three years, Kodak has posted a profit in six of the last nine quarters. It reduced its debt by $294 million in 2008 to $1.3 billion.
In December, Kodak withdrew its full-year 2008 operating profit and sales forecast because of the global recession and stronger dollar. It said executives would miss out on salary hikes in 2009.
Its consumer digital imaging division absorbed a $40 million operating loss in the quarter compared with a year-ago profit of $91 million as sales slid 30 per cent to $958 million from $1.37 billion. Sales of inkjet printers more than doubled to 730,000 in 2008 but fell short of a top-range target of 1.5 million.
Hurt by a softer commercial printing market, graphic communications posted a $4 million operating loss, compared with a $30 million profit a year earlier, as sales fell 14 per cent to $821 million.
The film, photofinishing and entertainment unit more than doubled its operating profit to $39 million from $17 million despite a 27 per cent drop in sales to $652 million. Sharp cost reductions and lower retiree benefits were partially offset by a slide in consumer film sales and higher silver costs.
In all of 2008, Kodak earned $339 million, or $1.20 a share, down 50 percent from $676 million, or $2.35 a share, in 2007. Sales fell 9 percent to $9.42 billion from $10.3 billion.
Through 2011, Kodak has said it expects revenue to rise 5 per cent a year, driven by a 10 per cent to 12 per cent annual rise in digital sales. Operating profit, it forecasts, will more than triple to $1 billion.
