Monday, July 25, 2011

Eastman Kodak Company (NYSE: EK): Q2 Earnings Preview 2011

Eastman Kodak Company (NYSE: EK), the photography pioneer, is scheduled to release its second quarter earnings before the opening bell on Tuesday, July 26, 2011. Analysts, on average, currently expect the company to report a net loss of 19 cents a share on revenue of $1.89 billion. In the year ago quarter, the company reported earnings of 33 cents per share on revenue of $2.41 billion.

Eastman Kodak Company provides imaging technology products and services to the photographic and graphic communications markets worldwide. It operates in three business segments: Consumer Digital Imaging Group (CDG); Film, Photofinishing, and Entertainment Group (FPEG); and Graphic Communications Group (GCG). Kodak has posted a net loss four of the last five years.

In the preceding first quarter, the Rochester, New York-based company's net loss was $249 million, or 92 cents a share, compared with a prior-year profit of $119 million, or 40 cents a share. Earnings from continuing operations totaled $227 million, compared with $389 million a year earlier. Revenue declined 31% to $1.3 billion, primarily due to a $550 million non-recurring intellectual property licensing transaction in the year ago period. Analysts, on average, expected the company to report a loss of 61 cents a share on revenue of $1.4 billion.

Kodak, which helped popularize consumer photography, has struggled in recent years amid the decline of traditional film sales. The company has largely relied on income from licensing its patents as it shifts away from its declining film business and moves into new digital areas.

Chief Executive Officer Antonio Perez, who has led the company since 2005, is using proceeds from intellectual property licensing to invest in the company's inkjet printing, packaging and software units to blunt falling revenue from camera film. Earlier this year, the company sold some of its microfilm assets and unloaded one of its sensor patent portfolios as part of its effort to generate cash.

The company is now exploring a sale of a small but important part of its U.S. patent portfolio as the imaging company seeks to stem its cash woes and capitalize on growing demand for intellectual property that can be used in wireless devices. The portfolio includes more than 1,100 U.S. patents for capturing, storing, organizing and sharing digital images.

The company is involved in a number of intellectual property disputes with tech giants like Apple Inc. (NASDAQ: AAPL) and Research in Motion Ltd. (NASDAQ: RIMM). The company recently received a mixed regulatory decision that failed to resolve its patent claims against Apple Inc. and Research in Motion Ltd. The U.S. International Trade Commission upheld in part an earlier administrative law judge ruling that Kodak's patents weren't violated, but also rejected parts of the ruling and sent the case back to the judge for a ruling later this summer. Kodak estimated in March that a favorable ruling could be worth $1 billion because Apple and RIM would be forced to settle.

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