As traditional film based cameras go the way of the dinosaur, iconic camera maker Eastman Kodak (NYSE: EK) has attempted to shift its focus to digital products.

However, the shift might not be happening quickly enough to recover the losses from the sinking film, photofinishing and entertainment group. Yesterday, Kodak reported revenue of $1.569 billion, down 11 percent from $1.766 billion in the second quarter of 2009. The aforementioned film, photofinishing and entertainment group was down 21 percent. The results were short of analyst expectations and sent the stock tumbling down 11 percent to $4.07 per share.

"Film volumes have been declining for years now," Standard & Poor's equity analyst Erik Kolb said. "Last year it declined 24 percent from the year before. The year before that was an 18 percent decline."

In its place, Kodak has moved towards a digital-based product lineup. That includes cameras, printers and prepress equipment, and has been a bright spot for the company. The ink printing business specifically has been one area of growth. In the second quarter, the company said revenues for digital printers increased eight percent year-over-year. The commercial printing business grew 18 percent year-over-year.

"Yesterday's business is going to hell in a hand basket. Tomorrow's business -- ink printing -- has good margins. It takes time to develop a good ink printing business and build a large population of printers, whether they are commercial or enterprise. But in the long run, ink printing is as profitable as film," said Ulysses Yannas, analyst at Buckman, Buckman & Reid.

In terms of making a name for itself in the digital printing business, Kolb says Kodak could run into one problem. While the company's digital initiatives are sound, they still rank behind their peers in many inkjet products. Companies such as Canon (NYSE: CAJ) and Sony (NYSE: SNE) have products that are more competitive than what Kodak offers, according to Kolb.

Both said Kodak is a much better long-term investment than short term. "The door for film is closing faster than the door for digital print is opening up. That's the long and short of it. I've said quite a few times, don't buy for today. If you are investing for tomorrow, then that's a different proposition," Yannas says.


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