ROCHESTER, N.Y. – Eastman Kodak Co. (EK), boosted by the sale of a remote sensing business and gains in digital photography, recorded a sharply higher profit in the third quarter and beat Wall Street forecasts by a wide margin.
The world's biggest film manufacturer, which is navigating a tough transition to filmless photography, said Wednesday it earned $479 million, or $1.67 a share, up from $122 million, or 42 cents a share, a year ago.
Excluding restructuring costs and a gain of $434 million, or $1.51 a share, from the sale of its historic remote sensing systems business, profits were $226 million, or 79 cents a share, far ahead of the consensus forecast of 72 cents among analysts surveyed by Thomson First Call.
Helped by the dollar's weakness abroad, sales edged up 1 percent to $3.364 billion from $3.346 billion a year ago. Excluding foreign-exchange gains, sales fell 2 percent.
But its shares were down $2.04, or more than 6 percent, at $30.51 on the New York Stock Exchange (search).
Kodak grew into an icon on the strength of its chemical-based film, paper and photofinishing businesses but is now betting its future in digital terrain — from cameras, inkjet paper and online photofinishing to photo kiosks and minilabs, X-ray systems and commercial printers.
As its makes the tough transition from analog to digital photography, Kodak is slashing its payroll. By 2007, its work force is expected to drop by 12,000 to 15,000 from World War II-era levels of around 50,000.
During the July-to-September quarter, the company took a charge of 67 cents, mostly to cover job cuts.
The remote-sensing-systems unit, sold to ITT Industries Inc. (search) in February, sprouted in the early 1900s when Kodak created the first reconnaissance film for the U.S. military. In more recent times, its scientists developed precision optical components to capture extreme close-ups of soil and dust particles on the surface of Mars.
Sales of all digital products in the quarter jumped 39 percent while revenue from the traditional photo market fell 13 percent.
In the digital and film imaging division, revenues fell 7 percent to $2.31 billion but operating profits rose 5 percent to $214 million from $204 million a year ago.
Worldwide sales of consumer digital cameras and accessories leaped 41 percent, matched by a 41 percent surge in revenues from photo kiosks and related products.
Health imaging sales rose 12 percent to $642 million, but the segment's operating profits eased to $117 million from $102 million a year ago. Commercial imaging sales rose 3 percent to $195 million, pushing operating profits to $33 million from $24 million a year ago.
For the first nine months of the year, Kodak has earned $661 million, or $2.31 a share, up from $246 million, or 86 cents in the first three quarters of 2003. Sales rose to $9.75 billion from $9.24 billion.
Last month, Kodak told investors it remained on course to boost revenues from $13.3 billion last year to $16 billion in 2006. But it now expects digital sales to jump 36 percent a year between 2003 and 2007, compared with an earlier projection of 26 percent annual growth.
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