Jan. 28 (Bloomberg) -- Eastman Kodak Co., fresh from a $3.4 billion, four-year restructuring that cut its workforce in half, may announce a second shake-up amid a continuing drop in sales.

“To see any sort of meaningful turnaround, they have to get costs way more in line with their peers,” Standard & Poor’s equity analyst Erik Kolb said in an interview. “That means cutting jobs, cutting anything wherever they can.”

Kodak sliced its projected 2008 operating profit in half in October and withdrew the forecast altogether in December. The moves have caused some investors and analysts to doubt the success of Chief Executive Officer Antonio Perez’s overhaul that eliminated 28,000 jobs by the time it ended in 2007.

Kodak, which reports fourth-quarter results tomorrow, must lower costs further due to waning demand for digital cameras and inkjet printers, Kolb said Jan. 26. He declined to estimate how many jobs the company should pare.

Sales probably fell 13 percent to $2.79 billion in the quarter, according to three analysts in a Bloomberg survey. That would be the biggest quarterly drop since December 2006.

The 129-year-old company, which undertook the changes to turn its focus to digital products and services from traditional film, said in October it would make “some targeted position reductions,” without elaborating. The cuts were under way when Kodak announced them, spokesman Dave Lanzillo said in an interview yesterday, declining to comment further.

Different Scope

“There’s going to be some future restructuring,” John Witt, a director in the corporate finance group at Fitch Ratings, said in a Jan. 22 interview. “It won’t be on the same scope -- it can’t be -- in terms of headcount and costs.”

Perez needs to deliver some “unusually good things” to restore investor confidence, shareholder Rusty Robinson said. His Brentwood, Tennessee-based Robinson Investment Group owns 10,000 Kodak shares among the $102 million it manages, he said.

“The clock is ticking on Perez,” Robinson said. If the fourth quarter “feeds the negative fires that are already out there, then his job will be on the line.”

Lanzillo declined to comment on the CEO, other than saying “he’s made it clear that he remains committed to Kodak.”

Robinson urged the company to conserve cash by lowering its 25-cent semi-annual dividend. The yield is 7.1 percent, more than double the 3.2 percent yield for the S&P 500 Index.

‘Throwing Money Away’

“It’s like throwing money away,” Robinson said. “I hope that they have preserved enough of their cash that, if they had a bad quarter, it won’t hurt them too bad.”

The company has no plans for a dividend cut, Lanzillo said.

Shares are trading 92 percent below the record closing high of $94.25 in 1997, according to Bloomberg data since 1974. The stock has lost more than 70 percent since May 2005, when the Rochester, New York-based company announced Perez would take the helm. Kodak rose 19 cents, or 2.8 percent, to $7.07 at 4:02 p.m. in New York Stock Exchange composite trading.

Five analysts tracked by Bloomberg recommend selling the shares, the most since at least 1999, according to Bloomberg data. Two say hold, and none recommend buying.

Deutsche Bank Securities analyst Chris Whitmore cut his price target on the stock to $5 from $8 in December, when Kodak discarded its 2008 projections, citing a deepening global recession and changes in the value of the U.S. dollar.

‘Dramatic Action’

“Significant restructuring is required,” San Francisco- based Whitmore, who recommends selling the stock, wrote in a Dec. 10 note to investors. “Kodak should take dramatic action to cut product lines and operating expenses.”

Kodak job losses would come as the U.S. faces its highest unemployment rate in almost 16 years. U.S. companies have announced more than 519,000 job cuts since Nov. 1, according to information compiled by Bloomberg News and Challenger, Gray & Christmas, the Chicago-based executive search firm.

Kodak’s holiday sales beat the company’s expectations, helped by inkjet printers and Zi6 pocket video cameras, Chief Marketing Officer Jeffrey Hayzlett said Jan. 8. “We’re actually picking up market share,” he said.

The fourth quarter is Kodak’s most important, typically producing more sales than any other time of year. Asked what he’s looking for when the company reports results tomorrow, investor Robinson said: “Survival.”

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net.

Last Updated: January 28, 2009 16:26 EST