Kodak cuts jobs as digital photos erode business

Eastman Kodak Co. (NYSE: EK)said Wednesday it will cut between 4,500 and 6,000 jobs because its business is under pressure from digital photography.

Kodak said the move to digital cameras is affecting its core operation, selling consumers chemical-and-paper-based photographs.

Analysts have estimated that digital cameras may outsell traditional cameras in the United States by yearend.

"Digital adoption is reducing U.S. consumer film industry growth by eight to 10 per cent and now accounts for the great majority of the sales decline in film in the United States," CEO Dan Carp told analysts.

"We're moving rapidly to adjust our cost structure in light of that reality."

The company is also trying to refocus its business on the booming digital market.

Up to 3,000 jobs will go in Rochester, N.Y. where Kodak has its headquarters and employs about 22,000 people.

The company said the job cuts between six and nine per cent of its 70,000 employees worldwide will start later this year, mainly in corporate administration, manufacturing, and research and development.

Kodak stock rose $2.27 US to $26.87 US.

Kodak will offer severance packages and will take a charge of $350 million US to $450 million US to cover the costs of the layoffs.

The world's largest photography company announced the cuts along with weak second-quarter profit $112 million US (39 cents a share), compared with $284 million US (97 cents) a year earlier.

Sales were $3.35 billion US, unchanged from last year's second quarter.

The company eliminated 7,000 jobs in 2002, and announced another 1,800 to 2,200 cuts in January.