Kodak has today announced it is restructuring its business in an attempt to boost profits. Kodak will be creating three new groups: Photography (traditional and digital), Commercial Imaging (scanning, processing etc.) and Components (display and image sensor products). Kodak have not said if the new restructuring will involve further job cuts. "This is not about (job cuts),'' a Kodak spokesman said of the restructuring. "This is stepping aside from anything to do with job cuts. This is strictly about how Kodak does business. It is about making this organization simpler by eliminating layers of shared responsibility that now exist.''
Eastman Kodak Restructures Business Units
ROCHESTER, N.Y. (Reuters) - Photography giant Eastman Kodak Co. (NYSE:EK - news) on Wednesday announced a restructuring designed to make each of its businesses more responsible for sales and earnings in a bid to boost lagging profits.
Kodak also announced the departure of two senior executives. Executive Vice President of Global Operations Eric Steenburgh is retiring, and Ted Lewis, senior vice president and director of digital business development, is leaving the company.
The restructuring comes three weeks after Kodak posted a 77 percent decline in third-quarter profits and said business weakness would likely continue into 2002 due to slack demand for its film and camera products.
Kodak said it was creating three new groups: Photography, which combines traditional and digital photography; Commercial Imaging, which marries commercial scanning and processing; and Components, which provides display and imaging sensor products.
The health imaging and entertainment imaging units will remain as previously structured.
Under the new model, the units will be more responsible for managing activities that affect sales and earnings, such as supply-chain management, inventory, administrative spending, marketing, and customer service. Previously, businesses shared those responsibilities with the global operations division and other corporate-wide departments.
Kodak did not say whether the changes involved further job cuts. In late October it said it would cut up to 4,000 jobs in the fourth quarter, on top of a previously announced 3,500 cuts. Kodak has some 78,000 employees worldwide.
"This is not about (job cuts),'' a Kodak spokesman said of the restructuring. "This is stepping aside from anything to do with job cuts. This is strictly about how Kodak does business. It is about making this organization simpler by eliminating layers of shared responsibility that now exist.''
Kodak President and Chief Operating Officer Patricia Russo said in a statement, "These changes will create the foundation for profit improvement and, ultimately, pave the way for growth.'' No detailed time table for implementing the restructuring was provided.
Kodak, which earns most of its revenue from people's interest in snapping photographs, is facing tough times.
"The severity of this (economic) downturn is extreme,'' Kodak Chairman and Chief Executive Daniel Carp told analysts when the company posted its third-quarter results last month. ''People are not traveling, people are not taking large vacations, people are not going to resort locations, which are usually high picture-taking events.''
Kodak shares, which dropped to their lowest level in more than 15 years three weeks ago, closed at $26.46 on Tuesday on the New York Stock Exchange. The shares had outperformed the Standard & Poor's 500 index for most of the year but fell sharply after the third-quarter earnings report.
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