Kodak Stock Falls Sharply on Sales Report

The devil was in the lack of details for Eastman Kodak Co. on Friday as its stock fell sharply after it issued a grim sales assessment for January and February without offering Wall Street much insight.

Kodak’s stock closed at $79 a share, down $9.25 on the New York Stock Exchange, in heavy trading that had analysts hunting for specific reasons behind what the company said were flat sales for the period.

“They put out this cryptic announcement,” said Smith Barney analyst Peter Enderlin. “I think they probably did more harm than good.”

The giant photo products company said in a brief statement that it experienced modest unit volume growth in sales in the first two months of this year, but that was offset by lower prices and the negative impact of the strong dollar.

It added that growth rates in emerging markets moderated considerably in comparison with 1996.

Kodak also said, however, that the sales report would not have a significant impact on its operations.

“Although 1997 has started more slowly than we expected, there is nothing in these first months which would cause us to change our fundamental operating plans and objectives,” Chief Financial Officer Harry Kavetas said in the statement.

The company did not provide specific figures and would not specify which products or markets were affected. A spokesman said no Kodak executives would comment further.

Kodak rarely offers projections; that it offered any assessment threw analysts off and sent them scurrying for more information.

“They’ve been rigorous about not providing any guidance, not even any winks and nods,” Enderlin said. “That’s what made this all that surprising.”

Enderlin said he has dropped his projection for Kodak’s first-quarter earnings to 79 cents a share from 94 cents. Kodak earned 80 cents a share in the previous year’s first quarter.

For the year, Enderlin projects earnings per share of $4.83. His previous estimate was $5.15 versus $4.50 in the previous year.

Without information from Kodak, analysts were left to speculate as to the root cause of the flat sales. Kodak would not specify which products and parts of the country were trouble spots.

However, several analysts said they believe one weak link is Asia, where Kodak faces competition from Fuji Photo Film Co. and Konica Corp., which is also affected by currency issues of the dollar versus the yen.

“Mainly what’s happening is slower growth and increased price competition in the Asia market,” Enderlin said.