THOUSANDS NOT SMILING AT KODAK.

Byline: Ben Dobbin Associated Press 

Caught up in a price war with Fuji Photo Film Co., Eastman Kodak said Tuesday it is cutting 10,000 jobs in a billion-dollar overhaul that will pare spending on research into new products and shift more of its factory work to other companies.

The work force cut amounts to 10 percent of Kodak's payroll. But many on Wall Street had been expecting a more drastic move, and the company's stock plummeted 6 percent, down $4.06 per share to close at $62.18-3/4 on the New York Stock Exchange.

Even after a half-dozen restructurings since 1983, Kodak still hasn't shed enough excess weight to outrun a burst of global competition led by Tokyo-based Fuji. That rivalry intensified this summer when Fuji slashed color-film prices by as much as 30 percent in the United States.

Kodak Chief Operating Officer Daniel Carp said Tuesday the company would respond more quickly to Fuji price cuts, but said Kodak wouldn't instigate cuts.

``It's not our intention to lead prices downward in the U.S. market, but we're not going to allow that value gap to open up and rise to the levels that we saw this summer,'' he said.

The price war came at a time when Kodak was burdened by the dollar's strength, which makes its products more expensive abroad, and was struggling to turn a profit in the emerging field of electronic photography. In all, Kodak anticipates a 25 percent slide in profits this year.

``Early on this year . . . we thought some of the pricing pressures would go away, we thought the strength of the dollar might go away,'' said Chief Executive George Fisher. ``We were deluding ourselves with what turned out obviously to be wishful thinking.

``Along with the fact that I think we're out of denial, we are clearly determined to get Kodak back on an earnings improvement track,'' Fisher said at a news conference in New York.

Kodak will aim for an average annual increase of more than 10 percent in earnings per share, he added.

Kodak's core business of amateur film, photographic paper and cameras generates half its profits. But its market share of domestic film sales has fallen below 70 percent over the last year while Fuji's share has jumped to almost 20 percent, analysts say.

The cost cutbacks will be made over the next two years, as much as $750 million by the end of 1998. Kodak plans to set aside at least $1 billion during the fourth quarter to pay severance costs and other restructuring expenses.

The job cuts, expected to extend into 1998, will account for only about half of the savings. Kodak will reduce its $1 billion research budget next year by between $100 million and $150 million, much of it in the digital arena.

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Photo: George Fisher

Says company out of denial