ROCHESTER - Eastman Kodak Co., which turned picture-taking into a mass-market pastime a century ago, is quickly making up for a sluggish start in filmless photography in the 21st century.
Its digital sales, which surged 40 percent in the fourth quarter, will eclipse revenues from film and other iconic, chemical-based businesses for the first time in 2005.
"You're watching a great transformation," Kodak's chief executive, Dan Carp, declared Wednesday at an investors' meeting in New York.
Company executives "believed in this in 2003" when they unveiled an ambitious strategy to accelerate Kodak's foray into digital markets "and we darn well believe it today," he said.
The world's biggest film manufacturer posted a preliminary loss of $12 million in the October-December period, mainly because of one-time costs to cover job cuts. But its results, reflecting robust gains in the digital arena, handily beat Wall Street forecasts.
The transition from analog to digital imaging has been painful: A year ago, Kodak said it would eliminate 12,000 to 15,000 jobs by 2007, shrinking its work force to around 50,000 from a peak of 145,300 in 1988.
In the fourth quarter, Kodak lost the equivalent of 4 cents a share, compared with a profit of $19 million, or 7 cents a share, a year ago.
Excluding restructuring costs totaling $395 million, or $1.07 a share, and other items, profits were $236 million, or 78 cents a share. Analysts surveyed by Thomson First Call had forecast earnings of 66 cents a share.
Sales rose 3 percent to $3.765 billion from $3.648 billion in last year's fourth quarter.
In all of 2004, Kodak earned $649 million, or $2.16 a share, up sharply from $265 million, or 92 cents a share, in 2003. Sales rose 5 percent to $13.52 billion from $12.9 billion.
Kodak said it remains on course to boost revenues to $16 billion, or about $3 a share, in 2006. It expects to earn $2.60 to $2.90 a share this year.
But Kodak also cautioned that it found errors related to its income taxes in 2004 that might require a restatement. "It may raise or lower our after-tax earnings. ... It's impossible to tell at this time," Kodak's chief financial officer, Bob Brust, told investors.
"This situation arises from tax accounting errors, not misconduct," Brust added in a statement. "It involves complex tax rules, in many cases relating to our restructuring actions overseas."
An accounting review should be completed in six weeks "at which time we will issue final results for the fourth quarter and for the year," Brust said.
Kodak shares rose 11 cents to close at $31.66 on the New York Stock Exchange. Its shares are down from a 52-week high of $34.74 in November.
Digital product revenues swelled to $1.78 billion in the fourth quarter, propelled by a nearly 50 percent jump in sales of both digital cameras and photo kiosks. In contrast, sales of traditional products tumbled 16 percent to $1.98 billion.
"The key element is they are proving that you can be profitable, and quite profitable, in the digital area," said analyst Ulysses Yannas of Buckman, Buckman & Reid in New York.
"You're watching a great transformation," Kodak's chief executive, Dan Carp, declared Wednesday at an investors' meeting in New York.
Company executives "believed in this in 2003" when they unveiled an ambitious strategy to accelerate Kodak's foray into digital markets "and we darn well believe it today," he said.
The world's biggest film manufacturer posted a preliminary loss of $12 million in the October-December period, mainly because of one-time costs to cover job cuts. But its results, reflecting robust gains in the digital arena, handily beat Wall Street forecasts.
The transition from analog to digital imaging has been painful: A year ago, Kodak said it would eliminate 12,000 to 15,000 jobs by 2007, shrinking its work force to around 50,000 from a peak of 145,300 in 1988.
In the fourth quarter, Kodak lost the equivalent of 4 cents a share, compared with a profit of $19 million, or 7 cents a share, a year ago.
Excluding restructuring costs totaling $395 million, or $1.07 a share, and other items, profits were $236 million, or 78 cents a share. Analysts surveyed by Thomson First Call had forecast earnings of 66 cents a share.
Sales rose 3 percent to $3.765 billion from $3.648 billion in last year's fourth quarter.
In all of 2004, Kodak earned $649 million, or $2.16 a share, up sharply from $265 million, or 92 cents a share, in 2003. Sales rose 5 percent to $13.52 billion from $12.9 billion.
Kodak said it remains on course to boost revenues to $16 billion, or about $3 a share, in 2006. It expects to earn $2.60 to $2.90 a share this year.
But Kodak also cautioned that it found errors related to its income taxes in 2004 that might require a restatement. "It may raise or lower our after-tax earnings. ... It's impossible to tell at this time," Kodak's chief financial officer, Bob Brust, told investors.
"This situation arises from tax accounting errors, not misconduct," Brust added in a statement. "It involves complex tax rules, in many cases relating to our restructuring actions overseas."
An accounting review should be completed in six weeks "at which time we will issue final results for the fourth quarter and for the year," Brust said.
Kodak shares rose 11 cents to close at $31.66 on the New York Stock Exchange. Its shares are down from a 52-week high of $34.74 in November.
Digital product revenues swelled to $1.78 billion in the fourth quarter, propelled by a nearly 50 percent jump in sales of both digital cameras and photo kiosks. In contrast, sales of traditional products tumbled 16 percent to $1.98 billion.
"The key element is they are proving that you can be profitable, and quite profitable, in the digital area," said analyst Ulysses Yannas of Buckman, Buckman & Reid in New York.
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