By Steven Schnoll February 17, 2005 -- Eastman Kodak Company (NYSE: EK) reported preliminary fourth quarter results of a net loss of $12 million or $0.04 a share compared with net income of $19 million or $0.07 a share in the same quarter of 2003. Revenue rose 3% to $3.77 billion for the quarter. The company only reported preliminary numbers due to discovered errors relating to accounting procedures for year-end income taxes. Daniel Carp, Kodak Chairman and CEO declared “Kodak delivered in 2004”. Topics of this summary: Company Performance Overview Guidance Raine’s Radar Q & A Company Performance Due to the unique nature of the call and the company’s accounting challenges there is no definitive earnings report for the full year. Preliminary full year 2004 revenue was reported at $13.5 billion up 5% from $12.9 billion in 2003; excluding foreign exchange gains sales actually increased 2%. The company did report net earnings for the year totaled $649 million or $2.16 a share. More importantly digital sales were up 40%. The Graphic Communications segment, delivered by Jim Langley, showed strong results with sales up 152% or $219 million. These gains reflect the acquisition of Versamark and NexPress in 2004. The associated quarterly operating loss in Graphics amounted to $42 million as compared to a 2003 of $18 million. Most of that loss was due to the acquisition of the 50 % ownership of NexPress from Heidelberg. The company reported that the integration plans “are on or ahead of schedule for both Kodak Versamark and NexPress and both subsidiaries are enjoying solid demand for their products.” The goal is to create one unified “powerhouse” Kodak brand. The company continues to execute upon its three year cost reduction program. The program is anticipated to save between $800 million to $1 billion for full year 2007. Approximately 12,000 to 15,000 positions will be eliminated worldwide and square footage will be downsized by one third. Guidance Kodak is committed to obtaining revenue between $14 to $14.6 billion for 2005 with earnings per share price between $2.60 to $2.90. Kodak estimates earnings in the first half of the year at $1.10 to $1.20 a share. Raine’s Radar Kodak and Carp are committed to the rebirth of the company as a leading digital graphics provider, notwithstanding the distracting financial accounting tribulations. The purchase of Versamark, NexPress and now Creo clearly indicate the commitment of upper management to execute upon its promise within the Graphic Communications sector. It is interesting to note that very few substantive questions were addressed to this market segment even though Jim Langley gave a comprehensive presentation on the Graphic Communications segment in the earnings call. It seems the analysts don’t understand the graphics market place, don’t understand the graphics industry represents to the future of Kodak, or don’t care about this industry for future investments. (Note to Kodak: it would have been nice if Kodak used more accurate figures in the presentation of the actual graphics industry size in terms of total revenue and the number of working operations.) With brilliant industry leaders like Jim Langley, Jeff Jacobson, Homi Shamir and Barb Pellow it will be only a matter of time before Kodak pulls all the parts together into one cohesive organization. The products are all top notch, the NexPress brand may be a bit tarnished, but the industry is eagerly awaiting the next phase of Kodak’s strategy play. However, time is not on their side since cross-town rival Xerox continues to roll out formidable products that are quickly gaining market attention and acceptance. Q & A The Q& A period focused mainly on consumer products and the confusing details of their financial reporting The one interesting question asked concerning the Graphic Communications sector, dealt with what competitors Kodak would be replacing to gain market share in the commercial color marketplace. The intriguing answer was none. The growth would come from new pages migrating from traditional offset to digital. It seems Kodak is committed to keeping all three market segments, consumer, health and graphic communications, in tact for the time being