FUJI PRICE WAR SHOOTS HOLES IN KODAK LEAD.

Byline: Ben Dobbin Associated Press 

A photographic film price war between Eastman Kodak Co. and Japanese nemesis Fuji is flaring up as the peak summer season nears, and Kodak appears to be losing ground on its home turf once more.

Kodak insists, however, that its seemingly sharp drop in market share in April is no more than a blip in its effort to rebound from a 1997 assault by Fuji Photo Film Co. that led to the elimination of 19,900 Kodak jobs.

But the report of the shift in market share, first appearing in Friday's Wall Street Journal, sent Kodak shares falling 1.7 percent on a rising New York Stock Exchange, where it slipped $1.1875 to close at $67.625.

In the U.S. market, two retail surveys show that Tokyo-based Fuji grabbed 5 percentage points in unit sales at Kodak's expense during the first four months of 1999. Most of the gains came in April. But even with the decline, Kodak still accounts for about two-thirds of the rolls of film sold in this country.

In a business made highly volatile by coupon discounts and other promotions, Kodak said a few weeks or even months are too brief a period to accurately reflect its market standing.

Also, the supermarket, drugstore and mass-merchant data, tracked by ACNielsen Corp. and Information Resources Inc., do not include manufacturers' sales and provide only a partial view of the photo industry.

Any Fuji inroads would be worrisome, however, at a time when Kodak seemed to be rebounding from two hard years of price battles. Some Wall Street analysts think Kodak will have to lower film prices to make up ground.

B. Alex Henderson of Prudential Securities Inc. noted last week in his monthly survey of stores in Philadelphia that Fuji's average price per roll of film fell 5.2 percent from April to May while Kodak's rose 2.2 percent.

Henderson says the Philadelphia data historically mirror trends in the national market.

Fuji said its recent success is driven by more than just discounts.

``We give the retailers better service and a better deal,'' said James Chung, director of financial relations at Fujifilm USA. ``As a retailer, you always try to push the product that is more profitable to you.''

In 1997, Kodak was initially slow to respond to Fuji's price cuts and then had to resort to the most severe cutbacks in its history - hacking off 20 percent of its worldwide payroll of 100,500.

Through deep discounts, it had regained nearly all of the market share it lost and vowed to counter Fuji more aggressively than before.

``It is clear to me that Kodak will not ignore an increase in the price differential of film in the same way they did as a company two years ago,'' said one Wall Street analyst whose company has a policy restricting employees from being quoted by name.

According to Chicago-based Information Resources, Kodak's unit share of U.S. film sales fell to 67.5 percent in April from 76.5 percent in early January while Fuji's rose from 17.8 percent to 22.3 percent.

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Chart: PHOTO FOES

Here is a look at Kodak and Fuji U.S. market share, measured in dollars.

Associated Press