Kodak's Chairman complains of bad image: Photography giant Eastman Kodak Co. (NYSE:EK - news) has not told its story effectively to a stock market that still views it as an "old economy'' company, Chairman George Fisher said, noting Kodak's stock price has lagged despite record earnings... ...If you look at our digital revenues, it's $2.5 billion now,'' Fisher said.

This from a Reuters Story:

Kodak Chair Complains of 'Old Economy' Image

By Reshma Kapadia

WHITE SULPHUR SPRINGS, W. Va., (Reuters) - Photography giant Eastman Kodak Co. (NYSE:EK - news) has not told its story effectively to a stock market that still views it as an "old economy'' company, Chairman George Fisher said, noting Kodak's stock price has lagged despite record earnings.

Market players have characterized Kodak's stock as an "old economy'' issue at a time when the sexiness of "new economy issues'' involved with the Internet and technology has boosted stock values. Fisher, who said last summer he would retire at the end of 2000, told Reuters in an interview he is frustrated by this perception.

He said the "old economy'' perception ignores an aggressive push into digital cameras and imaging by Rochester, N.Y.-based Kodak, the largest U.S. maker of photographic film.

If you look at our digital revenues, it's $2.5 billion now,'' Fisher said, noting revenues of many new economy companies do not come close to sales in Kodak's digital camera and imaging business.

"We are on the leading edge of all this (digital business). We have told people that but for some reason they tend to continue to see us as a traditional consumer company, which is not all bad in the long-run because it means we are really understanding consumer marketing,'' Fisher said late on Wednesday. "It's frustrating but it will work out well.

At the beginning of this year, Fisher relinquished his chief executive title and Dan Carp, formerly president and chief operating officer, took over the CEO position as Kodak moved toward the end of its cost-cutting program and focused on the future of digital picture-taking.

"Our earnings are at an all-time high. I feel good about our strategy and what we are doing. I guess we should get the story out and show just how much opportunity we are sitting on.''

Kodak stock closed on Thursday at 55 7/16 per share, up 1 7/16 from Wednesday and off its 52-week low of 53 3/16. Its shares have met pressure as investors favor "new economy'' issues.

First-quarter revenues for Kodak were weaker than expected, largely due to currency exchange factors as the euro slid, and a decline in Kodak's market share in the consumer film business and the business aimed at professional photographers, has also concerned Wall Street.

"If we (the U.S.) keep raising interest rates and the dollar gets stronger, I'm not too certain that the euro will not go lower, which impacts our sales and profits,'' Fisher said, adding Kodak hopes sales growth will to range between 6 and 7 percent for the year but that growth is not going to come in the second half.

"If (the currency scenario) goes to heck then we will lose that ability'' to come in with that growth.''

He said growth in Asia and countries with dollar-denominated currencies was partially offsetting the impact of the euro.

As for market share, Fisher said Kodak lost significant market share in 1997 but overall has maintained its market share in the United States and around the world, with more than half of its business coming from outside the U.S.

"I can't think of a business over the long-term where we are losing share in the U.S.,'' he said, adding Kodak has not thought about spinning off any parts of its traditional business.

"We are partnering a lot in our traditional business. It has to do with getting scale where we don't dominate. There may be an argument at looking at horizontal plays in the future.''

He said acquisitions on both the domestic and international fronts are possibilities.

"Our strategy is to help consumers take pictures traditionally or scan them or help them with high-performance digital cameras with reasonable prices. Our plan is to transition as many as possible into the digital world as quickly,'' Fisher said. "I believe our digital imaging business would be akin to cell phones. ... I feel as though we are in digital camera world where we were with cell phones in the late 1980s.''

Many traditional companies have recently issued tracking stocks to unlock the value of some of their "new economy'' businesses. Kodak said it would consider a tracking stock and has looked at the idea, but it does not make sense right now.

Fisher said he "feels pretty good'' about Wall Street's earnings estimates for Kodak for the year, adding that it is striving for annual revenue growth of about 8 to 12 percent in the future. In the first quarter, the company posted sales growth of about 5 percent, excluding the impact of currency values.