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Taking pictures further on CD
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September 28, 1998: 10:27 p.m. ET
CEO Fisher sees huge opportunities in Intel agreement, but admits it's hard to tell
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NEW YORK (CNNfn) - Eastman Kodak is teaming up with Intel to create a product called picture CD. The Kodak-Intel picture CD is, in the words of the companies, supposed to "blend cool technology with warm moments."
Kodak is betting the new product will boost the bottom line. Wall Street, however, was not overly impressed. Dow component Kodak (EK) dropped 1-3/4 per share to 79-1/8, while Intel (INTC) stock fell 1-5/16 to 87.
Eastman Kodak's chief executive, George Fisher, appeared Monday on "Moneyline News Hour with Lou Dobbs" to discuss the initiative. Here are highlights of that interview:
DOBBS: I love that, "cool technology and warm moments." How much will that contribute to the bottom line?
GEORGE FISHER, CEO, EASTMAN KODAK: Well, ultimately, we expect this to be, in the early years, hundreds of millions of dollars of revenue. And if it's successful, we would expect a large fraction of the 80 billion pictures taken every year to somehow show up in the digital world on something like picture CD.
DOBBS: We take a roll of film in. We get back the film, as we are used to having it developed, and we also get to check a box and get back the CD as well.
FISHER: Yes. Just simply check the box, and you get your digitized pictures back on a CD with software -- you put into your PC, and ...
DOBBS: What's your sense of the immediate demand? Because trying to judge PC penetration and usage has got to be an extraordinarily difficult ...
FISHER: It is difficult. Nobody really knows. There's an article of faith here that people want to do a lot more with their pictures. Our joint aim with Intel is to help people do a lot more with their pictures in the digital world. The services that we would offer, archiving as well as sharing of pictures -- they go beyond picture CD. They would certainly enhance the revenue stream there and the profit. It's very hard to tell, though.
DOBBS: Well, George, you've had to cut jobs, you've restructured. You have been driving the company toward profitability. Are you there? Is the turnaround complete?
FISHER: Well, turnarounds are never complete. Every day you keep working on costs, and every day you've got to work on growth. Right now we're working on the cost equation very effectively. We need to get the growth side going even more effectively. I'm pretty confident, though, that we're on the right track.
DOBBS: Your market share has turned around?
FISHER: Market share has in the U.S. turned around, with some gains in the last couple of months. We think we know how to manage that now. We have bought ourselves room with our costs, so we have the flexibility to deal with whatever eventualities come up, whether it's a strong dollar or strong competitor.
DOBBS: Flexibility on price?
FISHER: Lots of flexibility on price as we need it. But we don't intend to run a price game.
DOBBS: That's a change over the past year in your original thinking. And the results are obviously paying off. You were talking about the U.S. market. Let's talk about the international market. Hard pressed in Asia -- how significant a hit has that been to your business?
FISHER: The actually revenue generated in the early affected Asian markets -- Korea, Malaysia, Indonesia -- were not that significant. Maybe 3 percent of our revenue out of those countries. Japan is very weak, though, as you know. We are making a great push into China. And China's still a reasonable market -- it hasn't been hit like the others. Certainly in Russia our revenue has taken a hit.
DOBBS: And your outlook, if you will, for the rest of the world economy, as a man...?
FISHER: That's grand request. I personally think as goes Japan, so too the rest of the world. If you can tell me how Japan is going to go, I think I could tell you how the rest of the world is going to go. My personal opinion: Japan will sort of linger along, nothing very exceptional one way or the other for a while. And that probably means that we're going to be bottoming out in a lot of these economies over the year.
DOBBS: Considerable talk about a slowdown, some take of it entering the U.S. market. Have you seen any sign of it at all?
FISHER: We have seen price pressures that are immense from companies who have an advantage currency wise. I have said for over a year that interest rates should start coming down, and I believe it's time that it gets done.
DOBBS: Alan Greenspan signaling last week that he is ready to listen to you.
FISHER: He has been listening to a lot of people, and I hope he listens to that one.
DOBBS: At this point you said a turnaround is never completed, but for this for the foreseeable future any further job cuts, any ...
FISHER: Well, we're just about one year into our two-year announced program from last year. So we had announced that we would take out 19,000 people, and that is on schedule and the costs are coming out on schedule. We committed to a half-billion this year, another half-billion next year out of our cost structure. And we're right on schedule to do exactly that. 
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Eastman Kodak Co.
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