ROCHESTER, N.Y. – Eastman Kodak Co. (EK) said on Wednesday Chief Executive Dan Carp (search) will step down in June and President Antonio Perez (search), a former Hewlett-Packard executive, will take the helm of the camera and film company, which is undergoing a tough transition to digital products.
Carp was credited with setting the once stodgy film company on the path to becoming a digital photography powerhouse, cutting some 15,000 job and slashing the company's dividend. But he was also criticized for not taking steps sooner.
Analysts said Perez, 59, has been integral in planning Kodak's turnaround strategy since he was hand-picked by Carp in April 2003 after 25 years at leading printer maker Hewlett Packard Co. (HPQ), and may be better suited to implement the next stages of Kodak's plans.
Carp joined Rochester, N.Y.-based Kodak (search) in 1970 as a statistical analyst, became CEO in January 2000 and was named chairman in December 2000. He will remain chairman until he retires in January 2006, when Perez will add that title.
Kodak shares closed up 4.4 percent, spurred in part by Lehman Brothers' upgrade of the stock to "equal weight" from "underweight."
"We are not surprised by this move — he wasn't just the deputy carrying out Carp's vision, he was part of the vision," said analyst Jamelah Leddy of McAdams, Wright, Ragen Inc. "(His) digital focus is what Kodak needs and he has the background ... and drive to effectively lead Kodak through its transition to becoming a digital company."
It will not be easy, analysts said.
"Antonio will be faced with the same challenges (as) Dan Carp," analyst Shannon Cross of Cross Research said. "Nothing fundamentally has changed. Secular declines in a lot of their businesses will be the same on January 1st when Carp is gone."
Many of those concerns bubbled to the surface in Kodak's disappointing first-quarter results. It posted a loss of $142 million, hurt by a faster-than-expected decline in traditional film sales. That prompted ratings agencies Moody's and Standard & Poor's to cuts Kodak debt ratings to junk — which can significantly raise a company's borrowing costs.
"We knew there would be bumps in the road and we hit one in the first quarter, but this (change) is not about that," Carp told Reuters. "Antonio has the leadership and commitment to power this through and its right to turn it over to him."
Perez's experience, including a stint as president of Hewlett's consumer and inkjet printer units, fits well with Kodak, which has gained market share with its digital cameras and small, companion printers.
"The company is on the path that they need to go on, and they are executing the best that they can," said portfolio manager Christopher Carosa of Carosa, Stanton & DePaolo Asset Management. "Antonio is a dynamic guy that everyone is very excited about." Carosa advises Bullfinch Western New York
Series Fund, which owns Kodak shares.
Perez said he will continue developing Kodak's plans, while eyeing other ways to take advantage of technologies that the company has studied, but not yet turned into products.
"(In the past) The company has not commercialized a lot of digital products ... but they have invested for many years in digital technologies," he told Reuters. "I have the opportunity to exploit and monetize that."
Carp has also beefed up his management team along the way, bringing on board printing experts such as HP executive James Langely, who runs Kodak's Commercial Printing operation.
The change comes as the 111-year-old company seeks to emphasize consumer digital cameras, medical services and commercial printing and move away from the declining market for traditional film and processing.
Kodak is midway through a program, announced in late 2003, to trim costs by shuttering manufacturing operations around the world and cutting jobs. It expects to spend $3 billion on acquisitions and anticipates a rebound in revenues and profit by 2006.
Kodak shares, which are down about 18 percent this year, climbed $1.13 to close at $26.58 on the New York Stock Exchange.