However, the financial results told a very different story. Kodak posted an operating loss of $600 million and a net loss of $1362 million for 2005. While Kodak’s cash flows from its traditional film business shrank much more quickly than Kodak had anticipated, its digital business with its intense competition, compressed product cycles and declining product prices failed to fill the gap. Since hitting a high of $99 in July 1998, Kodak’s shares had continued their downward track, closing at $24 at the end of January 2006. Perez’s response was to accelerate. Kodak’s reallocation of resources from conventional business into digital imaging. In July 2005 he had called for 10,000 job cuts in addition to 15,000 previously announced in order to staunch Kodak’s “bleeding year after year.” Kodak’s manufacturing capacity would be cut by two-thirds. He also called for the phasing out of film: “We need to establish an end point for this transformation and we need to get there soon.”
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