NEW YORK (Reuters) - Eastman Kodak Co slashed its outlook for 2008 revenue growth and earnings, after posting weaker-than-expected quarterly results from higher raw material costs and sluggish sales in its graphics business.
The dim outlook, which overshadowed a sharp increase in third quarter profits, comes as the company retools itself to focus on digital devices and printing services.
The company sees revenue declining by 3 percent to 5 percent. It previously had expected revenue to be flat to up 2 percent. Kodak also halved its 2008 forecast for earnings from operations.
The Rochester, New York-based company's updated outlook was still shy of forecasts by Wall Street analysts, who had expected small gains.
"The economic environment is increasingly difficult," said Chief Executive Antonio Perez. "Given the importance of the fourth quarter to the company's full-year performance, and the unprecedented level of uncertainty surrounding the global economy, we must be prudent ... which requires us to adjust our financial outlook."
Kodak reported third-quarter net income of $96 million, or 34 cents a share, from $37 million, or 13 cents a share, one year ago. Excluding special items, this year's profit was 22 cents a share, on par with analysts expectations.
Revenue fell 5 percent to $2.41 billion, as a decline in its commercial printing segment sales overshadowed growth in digital products, falling short of analysts view of $2.53 billion.
Kodak said that sales in the digital products segment, which includes consumer digital still and video cameras, digital picture frames, and intellectual property royalties, rose 7 percent, although margins in the unit weakened.
But the company attributed improved earning in the segment to "cost improvements" and intellectual property licensing.
Since late 2003, the Rochester, New York-based company has focused on the expanding market for digital devices, hoping to outpace the drop in demand for film. At the same time, it has reduced costs by cutting jobs and trimming manufacturing.
Kodak shares, which have fallen 30 percent since its last quarterly report and 50 percent so far this year, moved higher in early trading, along with gains in broader markets sparked by encouraging economic data.
The stock climbed about 3 percent to $11.17 in early trading on the New York Stock Exchange.
(Reporting by Franklin Paul; Editing by Derek Caney)
