— For the first time, Eastman Kodak Co. is generating more sales from digital imaging than from film-based photography, yet its massive makeover brought more pain in the third quarter — a $1.03 billion loss largely due to one-time tax charges.

Its stock fell $1.08, or 4.7 percent, to close at $22.06 Wednesday on the New York Stock Exchange after tumbling earlier to $20.91, its lowest level since September 2003.

Kodak lost the equivalent of $3.58 a share in the July-September quarter, compared with a profit of $458 million, or $1.60 a share, a year ago. Its loss from continuing operations, excluding one-time charges, was $103 million.

While stung once more by the rapid slide in film sales, Kodak found solace in its steady drive into the digital era. Its overall digital sales in the quarter surged 47 percent to $1.89 billion, while revenues from film, paper and other traditional, chemical-based businesses slumped 20 percent to $1.66 billion.

"This is an important milestone in our transformation journey," Kodak's chief executive, Antonio Perez, said in a conference call with analysts. " ... We're building a strong digital company for the future."

The quarterly loss, Kodak's third in a row, included a non-cash charge of $900 million, or $3.13 a share — an accounting requirement directly related to its huge overhaul. In July, Kodak disclosed plans to lay off 10,000 employees on top of 12,000 to 15,000 job cuts targeted in January 2004.

"It was a weak quarter," said Shannon Cross of Cross Research in Short Hills, N.J., citing an unexpected slowdown in consumer digital camera sales and shortfalls in the health-imaging division's digital business.

But Ulysses Yannas, a broker for Buckman, Buckman & Reid, said he was encouraged by signs of improving gross profit margins. "The picture doesn't seem to be as bleak as the numbers tend to indicate," Yannas said, singling out a jump in photo-kiosk sales at major retailers.

This is cache, read story here