CORRECT: Kodak Posts Loss, Reiterates 2009 Cash, Earns Views

Eastman Kodak Co. (EK) swung to a loss in the third quarter as the recession and tight credit markets continued to hurt sales of its film, commercial printing supplies and digital cameras.

With a steeper-than-expected 26% drop in sales in the latest period, Kodak said full-year sales will decline at the worse end of its previously forecast range. But it reiterated full-year earnings and cash targets, saying it expects significant improvement in fourth-quarter results as end markets improve modestly and it generates more income from intellectual-property licensing.

Kodak's third-quarter loss was $111 million, or 41 cents a share, compared with a profit of $101 million, or 35 cents a share, a year earlier. The latest quarter included $48 million, or 18 cents a share, in restructuring-related charges and other items, while the year-earlier period had $40 million, or 13 cents, in gains.

Excluding items, the loss was 23 cents a share, compared with a profit of 22 cents a share a year earlier.

Revenue fell to $1.78 billion from $2.41 billion, including a 2% negative foreign-exchange impact.

Analysts surveyed by Thomson Reuters had expected a loss of 19 cents a share on $1.89 billion in revenue.

For the full year, Kodak now sees revenue declining at the high end of its earlier forecast for a 12% to 18% drop, based on the results to date and an increased focus on cash and earnings.

But its segment earnings should be within its previous forecast, which was a range of break-even to $200 million, and Kodak continues to expect a loss from continuing operations under generally accepted accounting principles at the low end of between $200 million to $400 million.

"Our sales are stabilizing and some businesses are showing real signs of growth in the fourth quarter," said Kodak Chairman and Chief Executive Antonio M. Perez. "That, combined with operational improvements in several of our key product lines, increases our optimism for significant improvement in the fourth quarter, our largest quarter of the year."

The company is counting on a modest improvement in the market for its consumer and commercial products, among other things, to achieve that improvement.

Kodak said its consumer inkjet business gained market share, and it added new commitments for its new commercial printing platform, scheduled for delivery beginning in early 2010.

The Rochester, N.Y., company on Sept. 16 said it expected its three business segments to post a total operating loss of $50 million to $60 million. The company Thursday reported a total segment operating loss from continuing operations of $36 million.

Kodak last month raised $700 million: $300 million by issuing notes due 2017 from Kohlberg Kravis Roberts & Co. and $400 million in senior unsecured convertible debt due 2017. As part of that deal, Kodak said it would use $575 million of the proceeds to retire $575 million in convertible notes, which investors had expected the company to retire in 2010 using cash balances.

That has given the company some financial breathing room, despite a potential 35% dilution to existing shareholders.

Shares of Eastman Kodak closed at $3.47 and haven't traded premarket. They are down 47% this year and had been trading closer to the low end of a 52-week range of $2.01 to $11.74.

-By Mary Ellen Lloyd, Dow Jones Newswires; 704-948-9145; [e-mail]