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Thursday Thud

A Kodak moment:

If you believe in stock charts,

Eastman Kodak


, which has been restructuring itself for five years, looks like death. Charts hardly tell the whole story (despite what

Gary B. Smith

would have you believe), but many investors use them as jumping-off points for further research (a la



So, what's the problem at Kodak, which a few months ago trumpeted that its fourth-quarter earnings had beat Wall Street estimates? (Never mind the tepid sales growth.)

Could it be that no matter how hard the company tries to keep up with the digitalization of the photo world, Kodak is about to get



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? Could it be that no matter how much it tries to tie itself to the Internet with services designed to help upload pictures, it's about to get

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? Both companies got whacked by the new economy when people started emailing documents rather than copying and sending them.

Kodak, short-sellers believe, is facing a similar squeeze as its old-world business (film) gets displaced by digital cameras. While Kodak has made an ambitious foray into digital, it doesn't appear to be gaining ground fast enough to fend off the competition.

According to


, which recently cited numbers from

NPD Intellect

, Kodak's share of the digital-camera market -- a market that grew 63% last year -- fell to 13% from 17%. At the same time


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share rose to 47.2% from 42.3% in a market that accounted for 36% of all camera sales last year.

That's not all. In a report to clients yesterday, analyst Alex Henderson of


says that the latest retail reports show that Kodak's film sales were flat year over year despite the market's 5% volume growth. What's more, Henderson reports, for the third straight month Kodak lost market share to



and private brands. In fact, he adds, the whole 35-millimeter film market is slowing.

He doesn't say why, but the answer is obvious: digital.

A Kodak spokesman, however, says that the company itself expects consumer film sales to grow at an average rate of 4% per year through 2005, at which point they expect sales to level. He adds that sales data from places like NPD don't include the entire market. And he notes that Kodak's internal figures show that its digital-camera biz last year grew by 72%.

For example, he says, Kodak's own Web site, whose sales aren't counted by NPD, is Kodak's seventh-largest digital-camera distribution channel. (According to

PC Data

, however, its traffic ranks 1,829 among all Web sites.) In terms of digital-camera sales, "Kodak is No. 2 or No. 3, depending on whose data you use," the spokesman says. "Our intention is to be leading digital-camera manufacturers in terms of share. We know we need to be there."

So far, the trend is not Kodak's friend.

CFO follies:

I knew something smelled rotten two weeks ago when

Transaction Systems Architects


, no stranger to this column, announced a new chief financial officer without saying what happened to the old guy. The company never returned my call to say where he went, but several analysts who had talked to the company said the old CFO had been named to head a group of companies that could possibly be spun out. (Another day in the life of a tire-kicking columnist.)

The story of Transaction Systems, as

told by this column, was the story of a company that sold software that banks use to run their automatic-teller machines. The company hit the radar of short-sellers when it changed its revenue-recognition system in a way that allowed it to recognize revenue sooner than expected. Had it not made the switch, short-sellers alleged, the company wouldn't have made its numbers.

Lo and behold, at the end of December, Transaction

warned that first-quarter results would miss analysts' estimates because of Y2K delays. (Y2K delays discovered at year-end? You gotta be kidding ... or so I thought.) Y2K came and went and before long Transaction was talking up a new strategy aimed at unlocking shareholder value by spinning out these companies. The news caused Transaction's stock in recent weeks to more than double.

But there was that CFO issue: What happened to the old CFO? It's always worth asking questions when a CFO leaves, but it's


good when the company glosses over the departure without saying what happened to the old CFO.

Fast forward to late yesterday, after the market closed: Transaction issued a press release touting the formation of a new business unit. Down in the middle, in unrelated news, it says (oh, by the way) that the old CFO, Greg Duman, was resigning. Apparently he's joining a start-up. (Why didn't they say that in the first place?)

Could it be that the altered method of revenue recognition had faltered, and that as a result of the higher revenue, future comps will be harder to attain? If so, no wonder the company is scrambling to remake itself.

Help, I've been Seymoured:

Look for my response later today to

Jim Seymour

, who Wednesday took swipes at this column.

As originally published, this story contained an error. Please see

Corrections and Clarifications.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.