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Kodak misses Street expectations; stock drops 10%

Shares of Eastman Kodak Co. dropped more than 10 percent by midday Thursday after the company missed Street expectations for second-quarter earnings and saw its profit decline, excluding onetime charges and gains.
Kodak stock (NYSE: EK) was trading midday at $14.13, down from Wednesday’s close of $15.77. The stock had dropped as low as $13.78 during the morning.
Kodak officials pointed to its continued digital growth, but a combination of rising raw materials costs and a steeper-than-expected drop in its traditional film business hurt net income. The company also increased investments in some products.
The company reported second-quarter earnings from continuing operations of $200 million, or 66 cents a share, compared with a loss of $154 million, or 53 cents a share, a year ago. The results, however, include a $270 million gain from interest earned on a tax settlement with the Internal Revenue Service.
Excluding onetime gains and charges of $245 million, or 79 cents a share, the company would have registered a loss of $45 million, or 13 cents a share. That compares with a profit of $112 million, or 39 cents a year ago, excluding restructuring and other charges and gains.
Analysts expected earnings of 16 cents a share on sales of $2.44 billion, Thomson Reuters reported.
Sales rose 1 percent to $2.49 billion, including a 6 percentage point boost from the impact of currency exchange.
Digital revenue rose 10 percent to $1.64 billion. The film, photofinishing and entertainment group revenue totaled $847 million, a 14 percent decline.
“Our second quarter represents another step in our journey to create a growing, profitable Kodak,” said Antonio Perez, chairman and CEO, in a statement. “We delivered another quarter of growth, which reinforces our confidence in the promise of our digital franchise.”
Segment results for the quarter:

  • Consumer digital imaging group sales were $756 million, a 17 percent increase from a year ago. Loss from operations was $49 million, compared with a loss of $51 million. This loss was driven by increased investments in the consumer inkjet and image sensor businesses, partially offset by continued earnings improvement in digital cameras and devices, Kodak said.
  • Graphic communications group sales were $880 million, up 5 percent, led by increased sales of digital plates. Earnings from operations for the segment totaled $13 million, compared with earnings of $29 million a year ago.
  • FPEG revenue was $847 million, down from $980 million, reflecting decreased sales volume of consumer photographic film and photofinishing, partly offset by increased entertainment imaging sales. Earnings from operations for the segment were $54 million, compared with $121 million a year ago. The results reflect product cost increases driven by significantly increased silver and other raw material cost, Kodak said.

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  • Kodak misses Street expectations; stock drops 10%

    Shares of Eastman Kodak Co. dropped more than 10 percent by midday Thursday after the company missed Street expectations for second-quarter earnings and saw its profit decline, excluding onetime charges and
    gains.

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