Kodak ( EK) posted another dizzyingly bad quarter Wednesday, swinging to a billion-dollar loss and missing Wall Street revenue targets.

The poor showing was the third in a row for the Rochester, N.Y., picture company, which has made much of its efforts to shift to a digital business model but which continues to shock investors with its steep decline.

For the quarter ended Sept. 30, Kodak lost $1.03 billion, or $3.58 a share, on revenue of $3.55 billion. A year ago the company earned $12 million, or 4 cents a share, from continuing operations, on revenue of $3.37 billion. Analysts surveyed by Thomson First Call had expected a 66-cent profit on sales of $3.69 billion.

Kodak blamed the huge loss on a $900 million tax valuation allowance against its net deferred tax assets. The company also cited the role of accelerated restructuring charges. Kodak has said it plans to cut up to 25,000 jobs as part of its transformation process. Kodak said its pretax continuing operations loss was $103 million in the latest quarter.

The company said digital earnings rose to $10 million from $6 million a year earlier, though it assured investors that by excluding various costs you can come up with third-quarter digital earnings of $42 million. "This supports the company's previously expressed view that the bulk of Kodak's digital earnings in 2005 will be generated in the last four months of the year," Kodak advised.

"We remain committed to the 2005 cash flow target presented at our Sept. 28 investor meeting," CEO Antonio Perez said. "For the quarter, our cash flow performance was consistent with our expectations, our cash balance increased, and our debt decreased sequentially from the second quarter. We are delivering on the three key metrics by which we are managing the company: digital revenue growth, digital earnings growth and the generation of cash."

Back on Sept. 28, Kodak said digital growth was expected to be "somewhat behind" its target of $275 million to $325 million set earlier this year. Still, the company projected digital earnings from operations would rise by more than 300% for the year.

Wednesday's earnings setback is the second in as many quarters for Perez, who took over for Kodak's previous chief, Dan Carp, after April's steep shortfall. In July, Kodak reported a weak quarter and ratcheted up its layoff plans.

Kodak closed Tuesday at $23.14.