Originally created 05/12/05

Eastman Kodak CEO plans to step down



ROCHESTER, N.Y. - Eastman Kodak Co., rushing to bolster its digital businesses as film-based photography fades, said Wednesday it will replace its chief executive, Daniel Carp, with its No. 2 executive, Antonio Perez. Kodak shares jumped more than 4 percent..

The world's largest film manufacturer said Carp, who has been CEO since January 2000, will step down from the top post on June 1 and will retire as chairman at the end of the year. Perez also will succeed him as chairman on Jan. 1, 2006.

Kodak shares rose $1.03, or 4.1 percent, to $26.48 in morning trading on the New York Stock Exchange. Its shares have traded in a 52-week range of $24.63 to $35.19.

Kodak became an American corporate icon on the strength of its traditional film, paper and photofinishing businesses. But Carp led it on a painful path to expand its reach as a digital heavyweight in photography, medical imaging and commercial printing.

Carp, 57, joined Kodak in 1970 as a statistical analyst, became president and chief operating officer in January 1997 and was elected to its board in December of that year. In 2000, he succeeded George Fisher, who stepped down as CEO after a turbulent six-year reign.

Carp said he recruited Perez just over two years ago from Hewlett-Packard Co. in anticipation that Perez would succeed him at the helm.

"It is time for me to turn over the reins to Antonio, who has contributed so much to Kodak in such a short time," Carp said in the statement. "I am confident in his ability to continue the transformation, and I will leave with the satisfaction that Kodak's future is in the hands of such a capable, innovative leader."

Perez, 59, joined Kodak in April 2003 after a career that included 25 years at Hewlett-Packard, where he was a corporate vice president and a member of the company's executive council. Just prior to joining Kodak, Perez served as an independent consultant for large investment firms, providing counsel on the effect of technology shifts on financial markets.

"Kodak is privileged to have the strategic vision and experience of Dan Carp and Antonio Perez to lead us through this challenging transformation," said Richard Braddock, presiding director of Kodak's board.

"Dan embraced the digital opportunity, and recruited Antonio as the leader who will advance Kodak's success in digital markets," Braddock added in a statement.

In January, Kodak wrapped up a nearly $3 billion shopping spree as it bets its future on digital terrain - from cameras, inkjet paper and online photofinishing to photo kiosks and minilabs, X-ray systems and commercial printers.

The transition has not been easy, however. Kodak is eliminating 12,000 to 15,000 jobs by 2007, which will trim its work force to around 50,000. It has cut more than 11,000 employees already, including 1,650 this year.

In the first quarter, Kodak posted a $142 million loss because of a steeper than expected slide in sales of film and other chemical-based businesses and higher-than-expected costs to cover job cuts.

Carp said at the time that the first quarter's performance was disappointing, but said such short-term volatility is to be expected as Kodak was being transformed into a digital company.

A major credit ratings agency, Standard & Poor's Rating Services, meanwhile, cut its rating on Kodak debt in April to speculative or junk status in a move that could make it more costly for Kodak to borrow money.

With the era of soaring sales and fat profits from silver-halide film now departed, Kodak expects digital technology to become its biggest source of revenue this year for the first time. Despite the weak quarter, it reiterated its full-year forecast of $2.60 to $2.90 a share in operating profits. Analysts currently forecast earnings at $2.61 a share in 2005.

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