Singapore-based Flextronics International Ltd's agreement to produce digital cameras for Eastman Kodak Co may add as much as US$1 billion in annual sales for the world's largest customized electronics maker, Mor-gan Stanley said.
Kodak, the world's biggest photograph company, said on Tuesday that Flextronics will also distribute its cameras and manage some design for the Rochester, New York-based company. The agreement may add between US$0.03 and US$0.05 to Flextronics' earnings per share this fiscal year, Morgan Stanley's analysts Bernie Mahon and Aaron Husock said in a report published on Tuesday.
"It's getting harder to achieve growth in the contract manufacturing market," said George Wu (吳裕良), which helps manage US$3 billion in assets including Hon Hai shares at Invesco Taiwan Ltd (景順投信). "It's essential that companies such as Flextronics find ways of raising earnings."
As part of the agreement, Flextronics will pay Kodak US$35 million in cash for development and testing facilities in Japan and its manufacturing plant in Shanghai, Kodak said.
About 550 Kodak employees will be transferred to Flextronics, including 260 from its Japanese operation, Tokyo-based Kodak spokesman Akinori Yabata said by telephone yesterday. Kodak will continue to do some development work in Japan, he said.
Kodak's digital camera sales rose 50 percent, the strongest growth among the world's top five digital-camera makers, to 13.1 million units last year. This gave Kodak a market share of 14 percent of the 93.8 million units sold last year, according to researcher IDC.