Kodak struggles in digital age

Eastman Kodak yesterday said it would cut up to 6,000 jobs as it tries to adjust to the growth in digital cameras, which has devastated the market for traditional film.

The cuts were announced as the world's largest maker of photographic film reported a 60% slide in second-quarter profits. Earnings fell to $112m, (£70m) down from $284m in the same period a year ago.

The business has suffered from the drop in travel due to terrorism fears and the Sars outbreak. But the biggest impact is from the advent of digital technology, which dispenses with the need for film - the product that has made Kodak a household name.

The job losses represent around 9% of the workforce and follow other deep cuts over the past 12 months. The company eliminated 7,000 posts last year and said in January it would lose up to another 2,200 posts.

The latest cuts will be made across administrative, manufacturing and research and development departments.

"Our traditional consumer film and processing operations continue to face challenges associated with the increasing popularity of digital photography as well as persistent economic weakness, price pressure and a decline in travel and tourism," said Kodak chief executive Dan Carp.

Kodak has been desperately scrambling to diversify its business. On Monday the company announced a $466m deal to acquire PracticeWorks, a maker of software for dental and medical imaging systems.

Investors reacted positively to the cost cutting and Kodak shares were $1.66 higher at $26.25 in early trading on Wall Street. The results were not a shock to investors. Kodak warned in June its profits would fall in the second quarter. Sales rose slightly to $3.35bn, but excluding the benefit of foreign exchange rates would have been down by 6%.