"We are at the dawning of a new, more competitive Kodak, one that is growing profitably," chairman and chief executive Daniel Carp said.

Carp outlined plans for a "dramatically lower cost structure," selling off facilities and slashing jobs to save 800 million to one billion dollars in costs every year by 2007.

The news delighted investors. Kodak shares surged 3.50 dollars or 12.75 percent to close at 30.96 dollars.

The imaging group said it would pare a fifth of the workforce over three years and remove about one-third of its factory floor space by consolidating and selling off surplus assets.

To pay for the shakeup, Kodak said it would incur cash and non-cash charges of about 1.3 billion to 1.7 billion dollars over three years.

Kodak expected to spend about 700 million to 900 million dollars on severance-related costs and about 600 million to 800 million dollars on disposing of facilities.

"These plans are the consequence of market realities, and they will help us to fund a future for Kodak of sustainable, profitable growth," said president and chief operating officer Antonio Perez.

"They are absolutely required for Kodak to succeed in traditional markets as well as the digital markets to which our businesses are rapidly shifting," he added.

Kodak was determined to be a low-cost manufacturer and provider in all its markets, he said.

"To succeed, we must make our business model more competitive with what the markets -- and our customers -- demand."

Kodak said its net profit in the fourth quarter of 2003 amounted to 19 million dollars, sharply down from the year-earlier profit of 113 million dollars.

Profits were eroded by 256 million dollars in restructuring and other costs for the quarter, sharply up from 107 million dollars a year earlier.

But sales surged 10 percent to 3.78 billion dollars.

Kodak was already reaping some success from a shift of resources to digital products and services, the company said.

About 78 percent of Kodak's research and development dollars would be spent on digital photography by 2006, compared with about 66 percent now, it said. The rest would go to traditional film and services.

Kodak has struggled for years with falling revenues as its trademark yellow box was overtaken first by the Japanese film giant Fuji and now by the tide of digital products.

But the group insisted it had not abandoned film.

"Make no mistake -- we remain committed to film and printed output, which are, and will continue to be, great businesses," Carp said.

"As we have said for many months, Kodak will be a leaner, stronger, more competitive and more diversified company in the years ahead," he added.

"The actions we've reported on today support that vision, and position Kodak to remain the leader in providing customers with the products and services they need to capture, share, store, use, print and enjoy pictures."

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SPACE.WIRE