Jan. 30 (Bloomberg) -- Eastman Kodak Co. may need to sell assets and reduce its dividend to avoid running out of cash following a fourth-quarter loss and disappointing sales of digital cameras and inkjet printers.

“Their businesses are on track to burn a lot of cash into 2009,” Deutsche Bank Securities analyst Chris Whitmore said in an interview yesterday. “People are going to start questioning the company’s viability in its current form.”

Kodak should pare its consumer-digital portfolio by selling assets and quitting underperforming businesses, said Whitmore, based in San Francisco, who recommends selling the stock.

The company will take as much as $300 million in charges and eliminate as many as 4,500 jobs after sales declined for a third straight year in 2008, Kodak said yesterday. The restructuring comes little more than a year after the Rochester, New York-based company completed a $3.4 billion, four-year overhaul that eliminated 28,000 jobs, half its workforce.

Fourth-quarter sales fell 24 percent to $2.43 billion, Kodak said in a statement yesterday, missing the average $2.79 billion estimate of three analysts in a Bloomberg survey. The loss from continuing operations was $133 million, or 50 cents a share, compared with profit on the same basis of $92 million, or 31 cents, a year earlier.

“The second half of 2008 will go down in history as one of the most challenging periods we have seen in decades,” Chief Executive Officer Antonio Perez said in the statement. “We are taking aggressive yet prudent action to ensure that Kodak remains a strong and enduring competitor.”

35-Year Low

Kodak lost 46 cents, or 9.2 percent, to $4.53 at 4 p.m. in New York Stock Exchange composite trading, the lowest price since at least January 1974. The shares dropped 76 percent in the 12 months before today.

While the company said the job cuts will save as much as $350 million a year, that may not be enough, said Erik Kolb, a Standard & Poor’s equity analyst in New York.

“It seems they’re addressing reality, but we’d like further convincing that they’ll be successful,” Kolb said in an interview yesterday. “The cost savings that Kodak outlines from these cuts, while meaningful, may not stem cash flow issues.”

The company has $845 million in net cash, Cross Research analyst Shannon Cross wrote in a note to investors yesterday. “Cash is becoming more of an issue” because of the restructuring charges and potential drain this year, she said.

Kodak must spend to keep its digital technology competitive with peers, yet the recession has depressed consumer demand, Morningstar equity analyst Rick Hanna said.

‘Manage for Survival’

“It’s kind of hard to see how they can make their way through it,” Chicago-based Hanna said in an interview. “They have got to manage for survival.”

That means cutting Kodak’s 25-cent semi-annual dividend, shareholder Rusty Robinson said yesterday. The yield is 10 percent, triple the 3.4 percent yield for the S&P 500 Index. The payout has held steady since 2003, according to Bloomberg data.

“The dividend must be at risk,” said Cross, who’s based in Livingston, New Jersey. It cost Kodak $139 million in 2008, she said.

“They’re going to deplete their cash by paying a dividend at this point,” said Robinson. His Robinson Investment Group in Brentwood, Tennessee, owns 10,000 Kodak shares among the $102 million it manages, he said. “They need to bite the bullet.”

Kodak has no plans to change its dividend, Chief Financial Officer Frank Sklarsky said yesterday on a conference call with analysts and investors.

Lowering the dividend would be a “serious” gesture by Kodak’s management, Hanna said. “It’s going to be an ongoing question for the company whether they can continue to afford to use their precious cash to pay shareholders.”

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

Last Updated: January 30, 2009 16:09 EST