Eastman Kodak Co. posted its first quarterly profit in more than two years on Wednesday as it enters the final stretch of a tough transformation into a digital photography and commercial printing company.
The world's top maker of photographic film earned $16 million, or 6 cents a share, in the October-December quarter. That compared with a year-ago loss of $46 million, or 16 cents a share, when it took hefty charges linked to its massive overhaul.
Sales fell 9 percent to $3.821 billion from $4.197 billion largely because of its emphasis on improving digital profit margins, such as selling higher-end cameras.
Excluding one-time items, Kodak beat Wall Street expectations by earning $169 million, or 59 cents a share, in the quarter. Analysts surveyed by Thomson Financial had forecast earnings of 55 cents a share, but they also anticipated higher sales of $3.94 billion.
Its shares rose 29 cents to $25.81 in morning trading on the New York Stock Exchange. They have traded in a 52-week range of $18.93 to $30.91.
Kodak had run up eight quarterly losses in a row since last posting a profit of $458 million in the third quarter of 2004.
Now in the final year of its historic four-year digital makeover, Kodak has piled up $2.7 billion in restructuring charges and accumulated $2 billion in net losses over the last two years. It plans to eliminate up to 27,000 jobs, with 23,300 already axed through 2006.
Three weeks ago, Kodak said it was selling its health-imaging business, created after the discovery of X-rays in 1895, to Canadian investment firm Onex Corp. for up to $2.55 billion.
The company plans to pay down about $1.15 billion in debt and analysts expect it to funnel the rest of the proceeds into digital ventures - possibly the inkjet printer market - as profits from its storied film business rapidly erode.
Even before shedding its health unit, which employs 8,100 people, its work force has dipped to 40,900 - a level not seen since at least the Depression-era 1930s - from a peak of 145,300 in 1988.
Its overall digital sales in the quarter fell 5 percent to $2.45 billion, while revenues from film, paper and other traditional, chemical-based businesses slumped 15 percent to $1.36 billion.
Profits from traditional businesses jumped 72 percent to $98 million from $57 million a year ago while earnings from digital businesses shot up 92 percent to $271 million from $141 million.
While film and photofinishing revenues slumped 16 percent to $1.01 billion, operating profits rose 51 percent to $77 million from $51 million.
Health imaging sales fell 6 percent to $660 million and profits from operations eased to $86 million from $87 million because of higher silver prices and costs associated with selling the 111-year-old business.