Directors of Eastman Kodak Co, the world's largest maker of film, will decide at a meeting this month whether to reduce the company's dividend for the first time since it began payments a century ago.

　　Kodak, which expects its 2003 cash flow to drop by half from last year, will choose between maintaining the US million in dividends it paid last year, investing more money in digital technology, or doing both by borrowing money and putting its investment-grade credit rating at risk, investors said.

　　The needs of Rochester, New York-based Kodak have increased after it underestimated the popularity of digital cameras and failed to make up for the drop in consumer-film sales, analysts said.

　　Costs to make job cuts and pay debt have hurt cash flow, and Chief Executive Daniel Carp's plan to pursue growth in new digital businesses requires cash for acquisitions, analysts said.

　　"There's certainly a transition going on in their consumer business and it's different than what we thought the transition would look like," said John Moore, a Moody's Investors Service analyst.

　　"They have an obligation for the dividend and their debt. I would say they can handle either one or the other."

　　Kodak spokesman Gerard Meuchner wouldn't discuss the planned board meeting or the dividend other than to say there is "plenty of liquidity to meet the needs of the company."

　　At the current rate, Kodak will pay a dividend of US.80 a share this year, one cent more than the average earnings estimate of analysts surveyed by Thomson Financial.

　　Last year it paid out 66 percent of profit in dividends. Earnings this year haven't kept pace, said Laszlo Birinyi, president of Birinyi Associates.

　　"Investors would need a rationale other than the dividend for buying Kodak," said Birinyi.

　　Kodak surged 19 percent last year, the best performance in the Dow Jones Industrial Average, as a high dividend yield lured investors. So far this year, Kodak is the Dow's worst performer.

　　If Kodak does pay more than its profit as dividends, it won't be alone. Last year 27 members of the Standard & Poor's 500 Index paid out more than they earned.

　　Only five have cut their payments so far this year.