Earnings Preview: Eastman Kodak Co.

BEN DOBBIN

ROCHESTER, N.Y. (AP) — Eastman Kodak Co., the iconic maker of cameras, film and printers, reports its first-quarter results before the stock market opens Thursday.

WHAT TO WATCH FOR: A profit squeeze in Kodak's photographic film business as silver prices soar, and the impact of retail pricing pressures on its digital camera sales.

Analysts are expressing concern that earnings-per-share estimates for Kodak might have to be revised downward in 2011.

The picture-taking pioneer has been struggling to make headway in its decade-long transformation into a digital photography and printing powerhouse. Since 2004, it has reported only one full-year profit — in 2007. It expects more red ink this year before crossing back to profitability sometime in 2012.

Kodak's sales of low-end cameras have been hurt by lingering weakness in discretionary consumer spending and stiff competition from smart phones and video cameras. Deutsche Bank analyst Chris Whitmore points to more signs of eroding camera revenue through February. One factor in the decline, analysts say, is Kodak's attempt to shift to pricier cameras with higher profit margins.

The Rochester, N.Y.-based company is investing heavily in four businesses, led by digital inkjet printing. It expects to turn its first profit from home inkjet printers this year, and its commercial line of high-speed digital presses is targeted to turn profitable in 2012.

In the meantime, Kodak is banking on triumphs in digital-imaging patent disputes and even relying on slimmed-down profits from silver-based photography, its heritage cash cow. But film profits have narrowed even further as precious metals become a safe haven for investors. Silver prices have more than doubled in the last year, and a spike in aluminum prices is hurting its digital printing plate business.

WHY IT MATTERS: The results will likely illuminate Kodak's progress in springing back from the economic downturn. Kodak is relying mightily on leaner costs to help see it through its transition. It has trimmed its work force to 18,800 from 70,000 in 2002.