Eastman Kodak CEO Daniel Carp plans to step down

Wednesday, May 11th 2005, 10:24 am

By: News On 6

ROCHESTER, N.Y. (AP) _ 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.

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 next Jan. 1.

Kodak shares rose 56 cents, or 2.2 percent, to $26.01 in premarket trading.

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 in April 2003 to help guide Kodak's development in the faster-paced, highly competitive and more crowded digital arena and even anticipated that the longtime executive at computer giant Hewlett-Packard Co. 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.''

Before leaving Hewlett-Packard in 2001, Perez oversaw its $16 billion-a-year digital imaging and electronic publishing business. A native of Spain, he then spent 1 1/2 years as chief executive of French smart-chip maker Gemplus International SA and also counseled large investment firms on the effect of technology shifts on financial markets.

``Dan embraced the digital opportunity, and recruited Antonio as the leader who will advance Kodak's success in digital markets,'' said Richard Braddock, presiding director of Kodak's board.

Carp shook up a stagnant corporate culture at Kodak that stifled creativity, replaced almost the entire management team by bringing in outsiders seasoned in digital technologies and accelerated the shift of manufacturing operations overseas, particularly to China.

``Although he was an insider, he did a lot of firing,'' said Ulysses Yannas, a broker at Buckman, Buckman & Reid in New York. ``In the past, when a guy was given a task and he wouldn't perform, they'd move him someplace else. Carp essentially changed that by telling people, `You have a year to do the job. You don't do it, you're out the door.''

However, Carp was not a casualty of his own resoluteness. ``He is not going unwillingly _ that I am absolutely certain,'' Yannas said, adding that ``Perez is going to drive Kodak as hard as Carp was driving it.''

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.