(MONEY Magazine) – Few CEOs have ridden the highs and lows of corporate life as quickly as Eastman Kodak's George Fisher. When he accepted the top spot at the Rochester, N.Y. imaging giant in 1993, he was heralded as a savior for a beleaguered behemoth that had spread itself too thin. After all, Fisher had led Motorola through a period of prosperity marked by its dominance in mobile phones and semiconductors. Fisher quickly set to work focusing Kodak, selling off non-imaging businesses such as consumer products, including Lysol, and pharmaceuticals, paying down debt and concentrating on photography and the coming digital era. In 1996, Kodak launched Advantix, a new family of cameras and films, and by early 1997, Fisher was a hero who had tripled earnings to $1.5 billion on $16 billion in sales. Then disaster struck. First came a price war with nemesis Fuji Photo Film. Despite cutting prices, Kodak watched its U.S. market share drop to 65% from 69%. The digital unit lost $440 million for 1997. And the World Trade Organization ruled against Kodak in a dispute over opening up Japanese markets. Having promised to make Kodak bigger and better, Fisher had to resort to massive layoffs to cut expenses.

But now Fisher and Kodak are on an upswing. Cost cutting pushed operating profits up 38% in the first nine months of 1998, even as revenues from continuing operations fell 5% because of poor international sales. While Kodak has yet to regain U.S. market share in film, losses in the still developing digital business have narrowed, and Kodak's stock price has increased 20% in 1998. Fisher can concentrate again on pushing the company to grow. Most recently, he's been forming digital alliances--partnering with Intel to put pictures on CDs and with America Online in "You've Got Pictures," a service that allows an AOL member to drop off film and have it "developed" and then delivered via e-mail to his AOL account. Fisher, 58, spoke recently to staff writer Pablo Galarza about where Kodak is headed.

Q. What is Kodak's role in the digital age?

A. We see a networked world in making, taking and processing pictures. We will stick ourselves in the middle of that world with services that people are willing to pay for, like creating photo albums online or simply sending photos from point A to point B. Or they'll use one of our 13,000 kiosks, which are basically input/output terminals. People without computers can go to a kiosk and send photos halfway around the world.

We will always sell film, paper and chemicals. But in the future, we will let people take pictures and scan them in digital form, and we will make money on the different media [CDs or the Internet, for example] or material for output--ink-jet paper, thermal papers, traditional silver halide paper.

Q. Aren't your recent alliances with Intel and AOL a change in the way that Kodak does business?

A. Traditionally, our business is chemically based, and we do everything. In the digital world, it is much more important to pick out horizontal layers where you have distinctive capabilities. In the computer world, one company specializes in microprocessors, one in monitors, another in disk drives. No one company does it all.

Q. You've been fighting a costly price war in the film business in the U.S. At what point does vying for market share become a losing proposition?

A. It never does. We have to watch global market share, of which we gained some. In the U.S. we lost some, and we do not intend to allow that to [continue to] happen. But we are so much larger than our next competitor in the U.S. market that it is a mistake for us to compete only on price. The leader has to play with innovative products.

Q. Third-quarter earnings were strong, but revenues were actually weaker. How should investors gauge the vitality of Kodak's business? A. No. 1: Does the company have its cost structure in a competitive, world-class position? I would say we do. No. 2: Do we have the growth initiatives under way to deliver reasonable earnings growth in the future? All of those things are in place. One of our growth initiatives is emerging markets, which were down 17% in the third quarter and make up 17% of revenues. That's serious, but if you are in a consumer business, you cannot ignore 80% of the world's population. If you do, as a short-term gesture, that's a mistake.

Q. You've gone from hero to goat to hero. How do you keep your head?

A. I've never thought I was a hero and, quite frankly, I've never been treated as a goat. The challenges I've had to face--some of them we've done well at, some we haven't. I don't personalize what shows up in the press, because most of it has been pretty fair.