"If you look in the history books, you will see this is one of the hardest transformations to do," said Perez, a native of Spain who was hired by Rochester-based Kodak in 2003 from Hewlett-Packard, where he helped build an inkjet printer behemoth that he now aims to tackle head-on.

"We had $3 billion in assets associated with film. You cannot disassemble that that easily. ... It's a long ride but we all believe that we have enough assets, enough know-how and enough commitment from our employees to keep going. We're going to be a smaller company but a much better company, and we're going to start growing again, especially in 2008 but starting in 2007," he said.

While Kodak remains the world's top maker of photographic film, Perez doesn't discount someday discarding the storied business that George Eastman launched in 1881.

"Film is going to follow its own destiny," he said. "Right now, entertainment (motion-picture) imaging is very stable, is very good for the company. ... If that goes digital, which eventually I believe it will, then we'll do something else. We will do what's better for the shareholders."

While Kodak's transition to a new world of photography was hindered by a reluctance to phase out film — it created the world's first digital camera in 1975 but only began selling mass-market digital cameras in 2001 — the company didn't lag behind in research, amassing more than 1,000 digital-imaging patents.

"There was a lot to work with," Perez said. "It was disconnected and it was incomplete ... but it was there. You can accuse the company of being late commercializing digital products, but no one can say the company was late investing in digital technologies. Luckily, we were making a lot of money, and that money was going into that. That is what has allowed us to do what we're doing."

Kodak shares fell 24 cents to $26.45 in early trading Thursday on the New York Stock Exchange.

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On the Net:

Eastman Kodak Co.: www.kodak.com