ROCHESTER, N.Y. – Eastman Kodak Co. warned Wednesday that signs of slowing U.S. economic growth will crimp its digital photography profits this year, forcing it to build fewer digital cameras and home printers for the holiday season.
Even though its overall digital sales this year are expected to grow by more than 36 percent, a target set in January, Kodak said operating profit will fall short of a projected range of $275 million to $325 million because of the slowing economy and shortfalls in its health-imaging business.
“We have reduced the number of digital cameras and the numbers of home printers we’re going to build for the fourth quarter,” Kodak’s chief executive, Antonio Perez, said at an investors’ meeting in New York.
Because of uncertainty about the economic environment of the country, Perez said, “the prudent thing to do was expect somehow an impact on the disposable income of consumers. … We don’t want to end up with a large inventory of products that, as you know, lose value very quickly.”
Kodak is already battling a steep drop in demand for photographic film and paper as it navigates a tough transition to digital photography. In July, it disclosed plans to lay off 10,000 employees on top of 12,000 to 15,000 job cuts targeted in January 2004.
At a meeting with investors two years ago, Kodak acknowledged that its chemical-based businesses were in irreversible decline and outlined an ambitious strategy to become a digital heavyweight in photography, medical imaging and commercial printing by 2007.
The transition triggered nearly $3 billion in acquisitions, but has carried a high cost. The shutdown of film and other manufacturing operations around the world looks likely to drop its global work force below 50,000, down from 75,100 in 2001 and a peak of 145,300 in 1988.
Sales of conventional silver-halide film – Kodak’s cash cow for the last century – are expected to drop by 30 percent in the United States this year.
Shares of Kodak fell 12 cents to close at $24.89 Wednesday on the New York Stock Exchange.
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