Kodak posts deeper losses, shares fall

Reuters News
Posted: Jul 26, 2011 9:14 AM
Kodak posts deeper losses, shares fall

By Liana B. Baker

NEW YORK (Reuters) -Eastman Kodak Co <EK.N> posted a bigger loss than expected as the once-iconic photography company faced high raw material costs and struggled to shift its focus from film toward digital cameras and printers, sending shares down more than 8 percent.

Kodak's second-quarter loss from continuing operations increased to $179 million, or 67 cents per share compared to a loss of $167 million, or 62 cents a year earlier.

Adjusted for tax-related items, restructuring costs and pension-related costs, the company posted a loss of 62 cents. This came in slightly below analysts' average estimates of a loss of 61 cents.

The company maintained its forecast to generate $250 million to $350 million in cash this year from intellectual property licensing. Many investors see Kodak's value in its lucrative portfolio of intellectual property, but Kodak did not provide many details on Tuesday about the direction of that portfolio.

"When you're looking at Kodak's revenue in the quarter, you're not seeing any revenue from its 1,100 patents. You are not seeing what may be the hidden value of the company," said Rafferty Capital analyst Mark Kaufman.

Kodak hired an adviser to help shop around 10 percent of its U.S. patent portfolio, in light of red-hot demand for tech patents.

All of Kodak's segments posted losses on Tuesday. The company's sales of film in the second quarter were $396 million, a 14 percent decline from last year. Earnings in that segment were $2 million compared to $36 million a year ago partly because of the rising costs of raw materials, particularly in silver, which is used to manufacture film.

Sales at its graphic communications group, which includes its printers aimed at corporate clients, rose 4 percent to $685 million. That segment posted a loss of $45 million, however, as Kodak spent a lot on launching its commercial inkjet printers and on the higher costs of raw materials.

Sales at its consumer digital imaging group, which makes color printers, fell 8 percent to $404 million. Its losses in that segment improved as it started to make more money on the ink that goes along with those printers.

The company forecast total revenue between $6.4 billion and $6.7 billion for the year. It also said it would have less cash than expected at the end of the year, between $1.6 and $1.7 billion. It had previous forecast an annual cash balance of $1.7 to $1.8 billion.

Kodak shares were down 19 cents at $2.14.

(Reporting by Liana B. Baker; Editing by Derek Caney)