Eastman Kodak (EK) CEO Daniel Carp, who has been leading the photo giant's transition from film to digital, has an unwelcome distraction. On Jan. 26, Kodak said it would delay reporting final fourth-quarter results after discovering accounting errors. Kodak insisted that the problem stems from complex tax rules and does not involve misconduct. Even so, the company warned that when the matter is resolved, most likely within six weeks, aftertax income may be affected.
On a preliminary basis, Kodak reported a net loss of $12 million for the quarter, on sales of $3.8 billion, up 3%. But investors shrugged off the news, as Kodak shares closed virtually unchanged at $31.66 on Jan. 26. That's largely because Carp is clearly making progress in his mission to transform the film giant. Digital revenues soared 40% in the fourth quarter, more than offsetting a 16% drop in its traditional film revenue. He predicted that in 2005, digital sales will exceed traditional sales for the first time.
Some major drug companies posted solid revenue growth in the fourth quarter -- but saw their bottom lines hit hard by tax charges. Johnson & Johnson, Eli Lilly, and Schering-Plough (SGP) all took big tax hits in the quarter because of plans to repatriate billions of dollars in profits that had been booked abroad. Johnson & Johnson still posted net income of $1.2 billion for the quarter; Lilly and Schering recorded losses. While the move to bring back offshore earnings, made possible by the American Jobs Creation Act of 2004, dragged down fourth-quarter results, it could provide drugmakers with billions of dollars for research or acquisitions.
Corning (GLW) COO Wendell Weeks, 45, is taking the reins from James Houghton, who will retire as CEO for the second time on Apr. 28. Houghton came out of retirement in 2002 to save the company founded by his great-great-grandfather. After the telecom boom collapsed in 2001, many feared Corning wouldn't survive. But Houghton, who previously ran Corning from 1983 to 1996, managed to find huge new growth in ultrathin glass for flat-panel TVs and computer monitors. With Corning back in the black, and the stock at $11 -- up from just over $1 in 2002 -- Houghton says "the time is right" for him to step aside as CEO, though he'll stay on as chairman. Weeks, who previously led the expansion of Corning's optical fiber business, has long been seen as Houghton's heir apparent (BW -- Oct. 18).
Goldman Sachs (GS) and Morgan Stanley (MWD) each agreed to pay $40 million to settle the Securities & Exchange Commission's charges that they pressed customers to buy shares after an initial public offering to pump up new stock prices. The settlement ends a lengthy SEC probe of abuses in the marketing of tech company IPOs in 1999 and 2000. The SEC alleged that Goldman and Morgan Stanley tried to induce customers to bid up stock prices in exchange for hot IPO allocations. Both firms settled the complaints without admitting or denying wrongdoing. The SEC is planning to issue new guidelines soon on IPO marketing practices.
Four months after its debut, a tiny Amazon.com (AMZN) subsidiary has launched a big challenge to Web search leaders such as Google (GOOG) and Yahoo! (YHOO) On Jan. 27, A9.com (AMZN) announced a new kind of online Yellow Pages. It lets people not only find some 14 million local businesses in 10 U.S. cities but also view a series of photos showing the entire city block where the businesses are located, write reviews, and call the businesses over the Net. It represents the most ambitious entry yet in local search, an attempt by search firms to take a bite out of the $15 billion Yellow Pages market. Amazon isn't yet charging for the listings, making money so far from sponsored ads provided by Google.
-- New products helped push Hershey Foods' (HSY) fourth-quarter net profit up by 37%.
-- Ford (F) said it expects to earn between $530 million and $745 million in the first quarter.
-- EMC (EMC) raced past expectations with 46% fourth-quarter earnings gain.
Somebody doesn't like Sara Lee (SLE): investors. Shares of the conglomerate fell 9.5%, to $22.59, in the two trading days ended Jan. 26 after it lowered its fiscal 2005 profit outlook. The Chicago company says it's facing a price war in Europe and higher commodity costs.