<THE FOOLISH FOUR>

Foolish Four Report
by Robert Sheard

LEXINGTON, KY. (Jan. 15, 1998) -- The second of our 1998 Foolish Four stocks reported fourth-quarter earnings today and topped the consensus analyst estimates -- we're two for two. Yet the slightly better-than-expected numbers for Eastman Kodak <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EK)") else Response.Write("(NYSE: EK)") end if %> didn't do anything to stop the stock's ugly slide.

Including all of the job cuts and special write-offs for the quarter, Kodak lost $744 million compared to a profit of $246 million in the fourth quarter a year ago. After special items, though, Kodak officially posted a profit of 76 cents per share, two cents better than First Call's consensus estimate.

Beating the consensus numbers, though, couldn't overcome the announcement from management that the first quarter of 1998 is also going to be lower than the 1997 first quarter because of the continued strength of the U.S. dollar and the ongoing competition with Japan's Fuji Photo Film <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FUJIY)") else Response.Write("(Nasdaq: FUJIY)") end if %>.

A slight glimmer of good news in the report, however, is that the fall in income for 1997 wasn't as bad as Kodak predicted earlier. Expecting 1997 earnings to slip 25%, the actual drop in earnings was just 22%. Even a dim silver lining beats another lightning strike, I suppose.

For the entire year, Kodak's earnings fell from $3.82 in 1996 to a whopping penny a share in 1997. Ugh! Lest you Foolish Four holders despair, though, keep in mind that AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> was releasing reports early last year just as depressing as this one. Since the end of 1996, though, AT&T's stock has risen roughly 50%. Since April last year, it is up nearly 110%.

When you buy these Foolish Four stocks, they're often stocks no one else wants. They didn't acquire the nickname "Dogs of the Dow" innocently. And while there's no guarantee that Kodak will bounce back with the same fervor that launched AT&T to the top of the Dow returns for 1997, the stock is set up for a classic Foolish Four comeback over the next year or two. Don't be disheartened by today's loss announcement. If anything, it's good news that the results weren't worse. Fool on!

TODAY'S NUMBERS
Stock  Change   Last 
 -------------------- 
 UK   -   3/16  41.38 
 IP   -  15/16  42.00 
 MO   -1 15/16  45.06 
 EK   -1  5/16  58.44 
 
            
                    Day   Month    Year 
         FOOL-4   -2.27%  -2.54%  -2.54% 
         DJIA     -1.19%  -2.74%  -2.74% 
         S&P 500  -0.75%  -2.03%  -2.03% 
         NASDAQ   -0.11%  -1.48%  -1.48% 
  
     Rec'd   #  Security     In At       Now    Change 
  
  12/31/97  276 Philip Mor    45.25     45.06    -0.41% 
  12/31/97  289 Int'l Pape    43.13     42.00    -2.61% 
  12/31/97  206 Eastman Ko    60.56     58.44    -3.51% 
  12/31/97  291 Union Carb    42.94     41.38    -3.64% 
  
  
     Rec'd   #  Security     In At     Value    Change 
  
  12/31/97  276 Philip Mor 12489.00  12437.25   -$51.75 
  12/31/97  289 Int'l Pape 12463.13  12138.00  -$325.13 
  12/31/97  206 Eastman Ko 12475.88  12038.13  -$437.75 
  12/31/97  291 Union Carb 12494.81  12040.13  -$454.69 
  
  
                              CASH     $77.19 
                             TOTAL  $48730.69