Things are going so bad for Kodak (NYSE:EK) that it can't even get its fiscal snapshots to develop correctly. Last night the photography giant warned that it would be restating its financials for the past two years to correct some accounting blunders.

After mending its oversights, the company expects to knock $0.07 per share off of last year's earnings and rub out as much as $0.12 a share from its 2003 showing. The company announced that it was having some accounting hiccups back in January.

Investors shouldn't be too concerned. These are strictly bean-stacking issues and won't have an impact on the company's reported revenue and cash flow for those periods. Shareholders know where their real concerns lie -- and Kodak knows it, too. The question is simple: Will the company be able to make a successful transformation from an old-fashioned film company into a digital photography pioneer?

The answer seems to be a resounding yes. Kodak has developed a suite of digital-photography products, and its photofinishing touch is still popular when it comes to ordering digital prints. The company shipped 4.9 million digital cameras last year, topping former market leader Sony (NYSE:SNE) stateside. Yet before you run out and buy Kodak, confident that Kodak is a bargain at 16 times trailing earnings even with the restated earnings, let's ponder an even more important question: Is this a battle worth winning?

Hop on Kodak's lap, and it will tell you about how great the good old days were. Folks bought Kodak film and wound it up into their cameras. Every click advanced the frame. They would need to develop every snapshot to see which ones were worth keeping. Then they would have to buy a new roll of Kodak film and start the process all over again. Kodak was there, cashing in every step of the way.

Today is different. Rolls don't need to be replenished; the memory just gets deleted. You don't need to print every shot; you can cherry-pick which ones you want developed. And, lo and behold, printer companies like Hewlett-Packard (NYSE:HPQ) and Lexmark (NYSE:LXK) are putting out nifty devices that print great photos from your digital pics. Even Dell Computer (NASDAQ:DELL) has a line of branded photo printers.

Kodak isn't just fighting Fuji (NASDAQ:FUJIY) these days. It's duking it out with modern technology. But I like Kodak's chances. It's the one name that mainstream consumers associate with quality, and that will be worth a premium even in a realm of commodities. But the pie is no longer as lucrative, and Kodak will have to live with its thinner slice. That means that investors will need to assess what the company's business of tomorrow is truly worth.

Thankfully, it's not all riding on consumer products. Kodak is also holding up quite well on the health-care side, thanks to its robust radiography business. So Kodak isn't going away, but it would do well to remember the key to taking a great picture: Focus before you shoot.

Thumb through these recent snapshots:

Longtime Fool contributor Rick Munarriz has never tried to shake it like a Polaroid picture. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.