Kodak Sheds Subsidaries to Focus More Clearly on Imaging Business

EASTMAN Kodak Company had quite a moment on Wall Street this week: Its stock rose sharply on news the company was selling off three divisions to focus on its core photography and imaging business.

The divestiture plan also rebuffs critics who have said new Kodak chairman George Fisher - who took over the Rochester, N.Y.-based company in December - had been too slow in rebuilding the venerable company.

For all its prestige, Kodak became tarnished by corporate and financial problems in the late 1980s and early 1990s. Mr. Fisher appears to be boldly taking the managerial reins at Kodak, just as he did when he helped turn Motorola Inc. into one of the nation's most respected high-tech companies.

Fisher announced earlier this week that Kodak will sell - ``in an orderly and responsible manner'' - its Sterling Winthrop pharmaceutical division; L&F Products, which makes personal care and household products (including Lysol disinfectant); and its Clinical Diagnostic Division. The three divisions account for about 22 percent of Kodak's overall revenues, based on 1993 returns of about $17 billion.

According to Fisher, Kodak will focus on its core imaging business, including image capture, processing, information storage, and the output and delivery of images. Kodak will also expand its digital electronic-imaging business.

A number of Wall Street analysts who follow Kodak on a daily basis are upbeat about the proposed divestiture. They say Fisher is determined to steer the company into multimedia, high-tech information processing.

Most stock analysts assume that Kodak will generate respectable profits in 1994. Ty Govatos, of investment house Donaldson, Lufkin & Jenrette Inc., forecasts per share earnings of $2.70 this year, up from around $2.55 in 1993. Prudential Securities Inc. analyst B. Alex Henderson projects only a slightly smaller per share earnings of $2.65 for 1994.

Kodak's challenges are considered long-range: They include stepped-up competition from overseas companies such as Japan's Fuji Photo Film Company; changing demographics in the United States, as the birth rate drops; and the need to shed unnecessary divisions to more clearly focus the business.

This week, Kodak addressed the issue of definition - no small step for a photo-imaging company.