(MONEY Magazine) – In a move that stunned investors, Eastman Kodak (EK) announced in September that it would slash its dividend by 70% and redirect the cash flow into acquisitions to beef up its digital businesses. MONEY's Pablo Galarza recently spoke with CEO Daniel Carp about his new strategy.

Q. Why pursue digital now?

A. With up to 20% of U.S. households with digital cameras, we were better able to predict the trends in digital substitution and film consumption, and we realized that the U.S. film business was not coming back.

Q. How will you fare in such a cutthroat business?

A.We've already built a $1 billion consumer digital business in five years. It turned profitable in the third quarter, which speaks for itself.

Q. Some say you've overpaid for recent deals.

A. We set goals for return on capital that we and the board monitor. Everything that we buy adds to what we already have. We didn't jump out and buy a dry cleaner.