Kodak stumbles to $137 million Q4 loss; to fire 4,500 workers
29 January 2009
Kodak, the company that pioneered modern photography, now finds itself beset by plunging sales of both digital and film-based photography products amidst increasing competition. Having posted a $137 million fourth-quarter loss against a profit of $215 million a year ago, the company is planning to cut 3,500 to 4,500 jobs, or 14 per cent to 18 per cent of its work force.
Sales slumped 24 per cent to $2.43 billion from $3.22 billion a year ago, hit by weakened demand for digital cameras, lower royalties from patents and unfavorable foreign exchange rates. Digital revenue dropped 23 per cent to $1.78 billion and traditional film-based revenue fell 27 per cent to $652 million.
The results come about a year after Kodak said it had completed an expensive four-year restructuring that transformed it into a maker of digital photography products, and a developer of commercial and retail printing systems. During that restructuring, Kodak halved its workforce, which now stands at about 26,900 people.
The maker of cameras, picture frames and consumer printers and provider of commercial printing services, also unveiled another round of restructuring, aimed at cutting costs, the latest in a string of such moves dating back to at least 2003.
The company said on Thursday it would reduce its workforce by between 3,500 and 4,500 in 2009. Kodak, which late in 2008 had earmarked 1,000-1,500 jobs to be cut in 2009, on Thursday said an additional 2,000 to 3,000 jobs will be cut. The latest cuts that Kodak aims to complete in 2009 could trim its ranks to 19,900, a level not reached since the 1930s Depression era. Its payroll peaked at 145,300 in 1988.
"The second half of 2008 will go down in history as one of the most challenging periods we have seen in decades," Kodak's CEO, Antonio Perez, said in a statement.
"We built significant momentum following the completion of our corporate transformation and our business results were on track through most of 2008, with digital revenue up 10 per cent in the first half of the year. ... However, during the last three months of the year, we experienced dramatic declines in several of our key businesses due to the slowdown in consumer spending and significantly reduced demand for capital equipment."
Shares of Kodak fell 2.4 per cent to $6.90 in pre-market trading from their Wednesday close of $7.07 on the New York Stock Exchange.