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Kodak stock takes a dive
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March 21, 1997: 10:08 p.m. ET
Increased competition, strong dollar force company to warn of low sales
From Correspondent Rhonda Schaffler
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NEW YORK (CNNfn) - Shares of Eastman Kodak plunged 9-1/4 points Friday after the company warned that sales for January and February were below expectations.
The company's announcement shocked Wall Street, which had watched the company post three quarters of better-than expected earnings. Kodak's warning was uncharacteristic, too, because the firm doesn't normally issue pre-earnings releases.
But the company has been getting hit with a one-two punch. Increased competition has forced Kodak to cut prices, and it's lost customers to Fuji because of the strong dollar.
Analysts say the dollar's steady climb against the yen has cost Kodak 3 percent of its market share.
"The currency swing that's occurred since January 1, about a 9 percent rise in the dollar, doesn't just impact you for the quarter that it occurs in," Alexander Henderson, consumer products analyst, said. "It impacts you all year."
Kodak's less than picture-perfect outlook comes just weeks after the company raised its dividend for the first time in eight years.
But analysts say Kodak's stumble is not a reflection on the leadership of CEO George Fisher, who's been selling off Kodak's non-core assets to focus on the photography business.
Morgan Stanley analyst Brenda Lee Landry said Fisher has run the company exceptionally well. (162K AIFF)
Kodak said weaker earnings will not cause a change in strategy. And some say investors should now look at Kodak stock as a buying opportunity.
Friday's sell-off leaves Kodak trading at 13 times earnings, which is lower than the market as a whole.
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Kodak
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