Kodak sees sales in critical inkjet printer unit tripling in '08 (Canadian Press)
Ben Dobbin, THE ASSOCIATED PRESS 25 minutes ago
ROCHESTER, N.Y. Eastman Kodak Co. said Thursday it expects to exert growing pressure on juggernaut Hewlett-Packard Co. in the home inkjet-printer market, possibly tripling sales this year of a fledgling line of printers that produce high-quality photos using inexpensive ink cartridges.
After completing a four-year, $3.4 billion overhaul, Kodak predicted at its annual investor meeting that sales will grow five per cent on average each year through 2011, driven by a strong 10 per cent to 12 per cent rise in digital revenue.
Its forecast of $10.3 billion to $10.5 billion in 2008 sales is at the higher end of a Wall Street range of $9.9 billion to $10.3 billion among analysts polled by Thompson Financial.
Kodak's stock, which skidded to a 30-year low of $16.66 two weeks ago, rose 76 cents, or 4.1 per cent, to $19.42 in afternoon trading.
Its digital businesses - from cameras, retail kiosks and printers to intellectual property licensing deals - will account for about 70 per cent of overall sales and 60 per cent of profits in 2008. Profits from continuing operations will range between $250 million and $275 million, it said.
"This is a very different company than the company we had four years ago," Chief Executive Antonio Perez told analysts and institutional investors in New York in outlining a new strategy to remodel the world's biggest film manufacturer into a leader in digital photography and commercial printing.
"Everything we promised that we were going to deliver financially we did, from our point of view," he said. "So maybe, just maybe, we should have some credibility for the next four, if I may ask."
One of the key components Perez is banking on to replace the huge profits Kodak once made from film is a line of inkjet printers introduced last March that he hopes will generate double-digit operating margins within three years.
Kodak sold 520,000 inkjet printers last year - exceeding a half-million-unit target. It expects to sell two-to-three times as many in 2008 and said it remains on course to hit a break-even goal of $1 billion in sales by 2010.
Hewlett-Packard commands close to half of all global sales in the $50 billion printer market, and market research group InfoTrends expects the colour home-printer sector to grow to $16.2 billion in 2010.
"We're just new in the inkjet business and they're always comparing us with HP. We feel very honoured, " said Perez, who expects Kodak to eventually grab a No. two slot in revenues.
Kodak said its replacement ink cartridges, priced at $10 for black ink and $15 for colour, still cost roughly half as much as the competition's. The multipurpose printers were originally priced at about $50 more than comparable machines on the market.
Rather than lowering ink prices, competitors have cut the price of printers over the last year, Perez elaborated in an interview with The Associated Press.
"We've sold the printers at more than 30 per cent than the average of the industry," he said. "We didn't want to be that much higher. Obviously our competitors have been discounting heavily to make it difficult for us to be successful."
Kodak's long-awaited entry into the rough-and-tumble inkjet market - it also expects to shake up the commercial printing arena this year - is a do-or-die strategy, some analysts say.
"I think it's critical, said Chris Chute of IDC, a market research firm near Boston. "The happy days of film are gone."
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