A Dark Kodak Moment

George M.C. Fisher is furious. Earlier this year, longtime nemesis Fuji caught the Eastman Kodak Co. chief executive off guard with a surprise attack on the U.S. color film business. Fuji cut prices by as much as 50% on multiple-roll packs, in some cases selling four rolls of film for $4.99 at Kmart stores. "Their marketing is crazy" fumes the 56-year-old Fisher. "If they want to put their brand in the mud, let them fight it out with the low-end guys," he adds.

Crazy or not, Fuji's move has helped stall the turnaround that Fisher launched when he arrived at Kodak in December, 1993. On July 16, Kodak reported an abysmal 16% drop in second-quarter profits on an anemic 2% gain in sales from continuing operations. That was well below Wall Street's expectations, and Fisher previewed more trouble ahead: a likely fall in full-year operating profits below last year's $3.1 billion. Kodak's stock dropped to $68 a share, a 52-week low. Fisher's own options lost $100 million in value within hours of the earnings announcement. The Kodak CEO is "in the trenches, and he's having trouble executing," says Merrill Lynch analyst Robert P. Curran, who pulled his buy rating on Kodak after the news.