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ROCHESTER — Eastman Kodak Co., the iconic maker of cameras, film and printers, reports its fourth-quarter results before the stock market opens Wednesday.
WHAT TO WATCH FOR: Weaker camera revenue as pricing pressures squeeze Kodak's low-end digital camera business, and the impact of surging aluminum and silver prices on its digital printing plate and photographic film businesses.
Analysts remain concerned that Kodak's profit margins could trend downward in 2011. Its camera sales have been hurt by lingering weakness in discretionary consumer spending and heightened competition from smart phones and video cameras.
Deutsche Bank analyst Chris Whitmore points to signs of eroding digital camera revenue in the fourth quarter despite a 15 percent rise in shipments through November. One factor in the decline, analysts say, is Kodak's attempt to shift to pricier cameras with higher profit margins.
The 130-year-old photography pioneer, based in Rochester, N.Y., is banking on replacing the hefty profits it once made from film with ink revenue from promising new lines of digital inkjet printers for both consumer and commercial markets.
It expects to generate its first profits from home inkjet printers this year. Its commercial line of versatile, high-speed digital presses is targeted to turn profitable in 2012.
In the meantime, the company is leaning heavily on triumphs in digital-imaging patent disputes. It booked $700 million in revenue in the first three quarters but still recorded a net loss of $92 million.
WHY IT MATTERS: The results will offer insight into Kodak's progress in springing back from the economic downturn and how much further it needs to travel in its decade-long struggle to transform itself into a digital photography and printing powerhouse.
Kodak is relying on leaner costs to see it through its transition. It has chopped almost 50,000 jobs since 2002 and its work force of 20,300 is its smallest since the 1930s. But after a $3.4 billion turnaround from 2004 to 2007, its momentum was stalled by the recession.
WHAT'S EXPECTED: Analysts polled by FactSet, whose estimates typically exclude one-time items, expect Kodak to earn 5 cents per share on revenue of $2.09 billion.
LAST YEAR'S QUARTER: Kodak posted net income of $443 million, or $1.40 per share, lifted by $421 million in licensing and royalty revenue from digital-imaging inventions. Sales rose 6 percent to $2.58 billion.
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On the Net: http://www.kodak.com
(This version CORRECTS the year the digital press segment is expected to become profitable to 2012 instead of 2010.)
