Eastman Kodak Co. is suspending its $2 billion stock repurchase program in order to reduce debt and free up cash for possible acquisitions, the company said Friday.

The decision also will help return the company's debt-to-capital ratio to about 40 percent, in line with goals the company announced Dec. 12.

The world's biggest photo film maker, based in Rochester, N.Y., was quick to point out that first-quarter cash flow remains in line with expectations and is consistent with the normal seasonal pattern experienced at the end of the year.

"The current period of economic deceleration provides added incentive to pursue our stated goal of strengthening the balance sheet," Kodak's Chief Financial Officer Robert Brust said. "We also want to ensure that we have the financial flexibility to consider acquisition opportunities that might arise during this time of economic weakness."

The announcement sent shares of Kodak (EK: Research, Estimates), one of the components of the Dow Jones industrial average, down $2.42, or 5 percent, to $42.40 in trading Friday morning.

But the market may be overreacting, said Gibboney Huske, analyst with Credit Suisse First Boston. She said companies historically have suspended purchases during stock buyback efforts but never reported the action to the market. She said Kodak is being overly cautious to comply with new public disclosure rules from the Securities and Exchange Commission.

"They're not buying back that much stock even before this," Huske said. "I think they were foolish to make a release, but their lawyers told them they had to make a release. In this market, given what's going on, people notice every little thing."

She said the only risk to earnings is a strike of movie studios by the Screen Actors Guild, which looks increasingly likely. She said while film used to make movies is a small part of Kodak's business, and a strike likely would delay rather than cancel most filming, there could be a slight short-term impact on Kodak's earnings.

In December Kodak warned investors it would miss fourth-quarter forecasts, although it gave reassurances of future growth that helped support its stock price at that time. It eventually reported a profit that was sharply lower than the year-earlier period but in line with the lowered expectations. The company blamed the decline on the slowing U.S. economy and "an industry-wide decrease in photographic activity."

The company announced last month it was restructuring its deal to buy Bell & Howell Co. assets to exclude the document scanner business. But that move was portrayed as an attempt to resolve antitrust concerns rather than any cost or cash-flow issue. In October, Kodak agreed to buy Bell's imaging business for $150 million cash.

Kodak has been spending about $1 million a day since December to buy back 32 million shares for $2 billion. During the fourth quarter of 2000, Kodak repurchased about 10 million shares at a cost of $445 million.