Discussion on Kodak on Radio 4

[Nick De Marco]

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Right now

Said that share price down 75% this year

The interviewer said that Kodak took the wrong road by still making film and not going digital

Whole discussion about massive restructuring necessary or end of Kodak

'No money made from imaging' 'hard copy on the down side' its all digital and internet etc...

 

How annoying

Whatever happens to Kodak I really hope they can keep making some of their films.

Anyone know how FUJI (who have obviously diversified) are doing?

Or Ilford?

Otherwise I better get used to those Czech or East European fils you see pop up - but yet to find a 400 one I like

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[wattsy]

There's no question that Kodak is in trouble. It doesn't help, IMO, that most of the commentary of Kodak's difficulties is made from the questionable perspective that film as a product does not have a future.

 

However, only a blinkered fool would deny how challenging it must be to continue to mass manufacture a product that most people (at least consumers) simply no longer buy. There's little doubt that very poor management has also contributed hugely to the decline of this once great company. I have no idea what the future holds for Kodak (and, by extension, Fuji) but I think we are some way off the point where we need to panic buy our favourite films.

 

That said, I might stock up a little on Portra colour film.

[plasticman]

As Ian says, all of these so-called analyses tend to begin with the assumption that at the center of Kodak's problems is an unwillingness to abandon film and 'modernize'. But as far as I can see, the major problems have stemmed from mismanagement of their digital assets - is this indeed correct? (I'm no financial analyst).

 

Radio4 journalists (and most of the 'experts' they consult) probably won't have any more knowledge of these areas than the average guy in the street, in my experience. They all just automatically think that film is antiquated rubbish, and either had already disappeared years ago or should have done. (Many of my friends are surprised that I can still buy film when they see me loading it - the end of Kodachrome was misinterpreted by a lot of them as the final demise of film altogether).

[}{B]

The item I heard this morning on Radio 4 included an interview with an ex employee who had helped develop Kodak's first digital sensors. He seemed to be suggesting that the company had reached the end of its natural life as a brand name and the parts should be broken up and sold off to return value to shareholders. Leica must be viewing these developments with some concern. Perhaps they may consider buying Kodak's sensor producing business to ensure continuity of supply?

[earleygallery]

If you look at the latest Kodak accounts you will see that the Film division is the only part of Kodak WHICH IS MAKING MONEY!

 

It's their failure to compete in the digital market that has hurt Kodak, not that they continue to make and sell film profitably!

[AlanG]

If you look at the latest Kodak accounts you will see that the Film division is the only part of Kodak WHICH IS MAKING MONEY!

 

It's their failure to compete in the digital market that has hurt Kodak, not that they continue to make and sell film profitably!

 

The only way you can reach this conclusion is if you ignore all of the write downs as Kodak has scaled back drastically by imploding buildings and abandoning various markets. They are trying to sell off or lease buildings and land. That is why the stock price has plummeted. I think some analysts are questioning the fact that management did not do this much earlier.

 

Kodak also somehow was expected to find an entirely new direction to go in. They didn't somehow think of the iPod, iPhone and iPad. Such a change may or may not have been possible but I don't think Kodak was a very flexible company regardless of what top management might have considered. Remember they did various other ventures such as buying Sterling Drugs and pioneering all kinds of digital technology that they were not capable of capitalizing off of. (They really are not a consumer electronics company or a camera and lens maker.) They have gone into other markets such as commercial printing equipment and laser theater projectors. They seem pretty good at R&D so maybe that will be a better role for a scaled down company than as a mass consumer products company.

 

In any case I doubt they could have changed directions and kept the company so large. And film clearly was not going to be the future for them unless they would be happy to be a much much smaller company.

 

Kodak has been bleeding money terribly lately and film sales were down another 10% last quarter with a 43% slide in earnings. Kodak's market cap is only about $300M so some people who have given up on hoping management can turn the company around would like to see it liquidate the company to stop further losses and pay off the shareholders. (This should be more than $300M as their patents and facilities are still worth something.)

[plasticman]

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And film clearly was not going to be the future for them unless they would be happy to be a much much smaller company.

 

Well this is essentially the point - if 'Kodak FILMS inc' (I'm making this up) was able to spin off and continue to produce film, without the massive superstructure of loss-making entities (in various fields) that constitutes the present loss-making mammoth, then film could definitely be the future of that "much much smaller company". imo of course.

[AlanG]

Well this is essentially the point - if 'Kodak FILMS inc' (I'm making this up) was able to spin off and continue to produce film, without the massive superstructure of loss-making entities (in various fields) that constitutes the present loss-making mammoth, then film could definitely be the future of that "much much smaller company". imo of course.

 

That would have been a smart move 10-15 years ago or more. I really think you'd be hard pressed to find investors to be excited about the prospects of an industry that is declining in sales by 10% per quarter. Some might think it would stay in a steady and slow decline, but now that some major retailers are dropping the products it seems to be causing a more sudden crash. My local CVS had only about 20 rolls of film in stock.

 

For 20 years or more, the Kodak management, having seen the writing on the wall regarding film, has been looking for various ways to keep it from ending up as a very small company and thus protect its shareholders. So far without much success. I think at this point the stock holders are just hoping to get something. Kodak was down to $.50 a share a few weeks ago and then rebounded to about $1.50. So some traders might have done OK with a nimble move or two. It is currently $1.07. In 1998 the stock maxed out at almost $99.

 

I was at the Kodak booth at the PhotoPlus Expo last week and they were giving out a free sample roll of your choice from 4 different films. I got a roll of Tmax 400. There was nobody else there when I went but the rest of the show was packed. So even free film is not much of a draw. I just noticed that this is only a 24 exposure roll whereas last year they gave me a 36ex roll and a roll of 120. I asked about some of the reps I used to know at Kodak and they are all gone. Having lived in Rochester during its heyday when Kodak was about the most benevolent company for a community that one can imagine, I am very sorry to see this disastrous decline. But I certainly did not and do not have the answer for them.

[wattsy]

That would have been a smart move 10-15 years ago or more. I really think you'd be hard pressed to find investors to be excited about the prospects of an industry that is declining in sales by 10% per quarter. For 20 years or more, the Kodak management, having seen the writing on the wall regarding film, has been looking for various ways to keep it from ending up as a very small company

 

You are grasping a little here Alan. Rather than hard facts, I think you are projecting your own lack of enthusiasm for the product.

 

I was at the Kodak booth at the PhotoPlus Expo last week and they were giving out a free sample roll of your choice from 4 different films. I got a roll of Tmax 400. There was nobody else there when I went but the rest of the show was packed. So even free film is not much of a draw.

 

This doesn't surprise me (though I suspect you are exaggerating the lack of interest). The kind of people that go to these shows have long moved onto shiny digital stuff as the object of their affections.

 

I asked about some of the reps I used to know at Kodak and they are all gone.

 

No doubt there was some tumbleweed blowing past at this point.

[AlanG]

You are grasping a little here Alan. Rather than hard facts, I think you are projecting your own lack of enthusiasm for the product.

 

FWI, the facts I read today are posted below.

 

The most enthusiastic view in the world cannot overcome the reality of the situation. But you are welcome to keep your hopes up if that makes you feel better. Back in the early 90s I had lunch with some Kodak execs and they said their goal was to keep Kodak from being the Pullman Sleeping car company of the 21st century. They have been trying, but nothing has really worked for them.

 

--------------------------------------------

 

2nd UPDATE: Kodak Exploring Financing Options As 3Q Loss Widens

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12:22 PM ET 11/3/11 | Dow Jones

--Kodak's third-quarter loss widens as film, digital camera sales decline

 

--Company lowers full-year forecasts for revenue, cash balance

 

--Company "exploring" financing options for $500 million in additional liquidity

 

(Updates throughout with more details and context from the company's conference call.)

 

By Matt Jarzemsky

 

Of Dow Jones Newswires

 

NEW YORK (Dow Jones)--Eastman Kodak Co. (EK) reported a wider third-quarter loss and said that to continue operating the next 12 months, it needs to complete a key patent sale or take "alternative actions" such as selling debt.

 

The Rochester, N.Y.-based photography icon's warning is the latest sign the clock is running out on its multiyear turnaround effort. The company has said it will return to profitability by shifting its focus to consumer and commercial printing, but faces mounting scrutiny as it continues to lose money and burn through cash.

 

The company didn't detail Thursday the progress of a central element of its revival effort: its effort to sell 1,100 digital-imaging patents. Kodak doesn't plan to reveal when it expects to complete the sale or for how much, but "we are very pleased with the progress we have made with this project and with the level of interest in the portfolio," Chief Executive Antonio Perez said on a conference call.

 

Kodak said in a regulatory filing that its ability to continue its operations the next 12 months depends on its ability to sell or license the patent portfolio or execute "alternative actions." The company is exploring financing arrangements that would result in $500 million in extra liquidity, it said.

 

Shares fell 8.3% to $1.10 in early-afternoon trading.

 

Kodak's financial performance in the third quarter continued to decline on lower digital camera sales volume and film revenue. The results compared with a year-earlier period that was helped by a $210 million patent-licensing deal.

 

The printer business suffered from higher-than-expected startup costs for commercial inkjet printers. Kodak executives have argued that once they sell enough printers, recurring revenue from ink will lead to profits.

 

The company trimmed its full-year revenue outlook to $6.3 billion to $6.4 billion from its prior expectation of $6.4 billion to $6.7 billion. It predicted a loss from continuing operations of $400 million to $600 million, deeper than its previous view of $200 million to $400 million in losses.

 

As such, Kodak trimmed its forecast for its year-end cash balance to a range of $1.3 billion to $1.4 billion, from its earlier forecast of $1.6 billion to $1.7 billion. But it gave additional clarity to the forecast, specifying that the figure doesn't count on proceeds from a potential sale of digital-imaging patents.

 

Focus has turned largely to Kodak's dwindling levels of cash. Kodak, whose operations burned $847 million in the first half of the year, reported Thursday it had $862 million in cash on Sept. 30.

 

For the third quarter, Kodak posted a loss from continuing operations of $222 million, or 83 cents a share, compared with a year-earlier loss of $43 million, or 16 cents a share.

 

Sales slumped 17% to $1.46 billion. Excluding a patent-licensing transaction a year earlier, sales fell 5.4%. Analysts polled by Thomson Reuters expected a loss of 44 cents a share on $1.65 billion in revenue.

 

Gross margin plunged to 14% from 27%, driven primarily by higher raw materials costs and the timing of the patent-licensing revenue.

 

The company's graphic communication segment posted a wider loss, due to start-up costs related to the company commercial printing initiatives and higher raw material costs, among other impacts.

 

The film, photofinishing and entertainment group saw earnings slide 46% as sales declined 10%.

 

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com

 

--Mia Lamar contributed to this report.

 

> Dow Jones Newswires

[Stealth3kpl]

Time to off-load it to Agfa

Pete

[bill]

*sigh*

 

Nothing else motivates you like the chance to have a good pop at the fools who still use film, eh Alan? Let alone the fools who use Leica.

[AlanG]

*sigh*

 

Nothing else motivates you like the chance to have a good pop at the fools who still use film, eh Alan? Let alone the fools who use Leica.

 

Yeah that's right. I hate you and your film lovin pals. You just have no idea how much. Can I assume you've been buying Kodak stock lately?

 

I see the b/w film of choice for many portrait shooters was just discontinued due to low sales. Is that your idea of an encouraging sign?

[ddp]

For the record, Kodak always hands out samples at Photo Plus in NYC.

 

I shoot film and I actually still like it...I think any photographer starting out could benefit from being handed a meter, an M3 and a roll of E6. In fact, I think some should go back to the caves us luddites inhabit and see why we enjoy dwelling there.

[AlanG]

For the record, Kodak always hands out samples at Photo Plus in NYC.

 

 

I've been to every one of the shows except one and I can't recall if they always did this. But my point was that there used to be a line for it.

 

Likewise Kodak and Fuji used to support and sponsor ASMP (American Society of Media Photographers) and APA (American Photographic Artists.) At local meetings, they typically would give away a brick of film in a drawing. Some time ago things changed and photographers wouldn't even want the free film. Kodak and Fuji stopped sponsoring the events too.

 

I guess these photographers are also like the attendees at the Photo Plus Expo and only like the shiny new things. Does that leave enough film users to keep a small viable film industry alive? Maybe, but it doesn't seem to me that is what Kodak is interested in doing.

[earleygallery]

AlanG, the way I reached my conclusion was from a quick look at the financials on the Kodak website. Headline figures for Film are positive, the other divisions show negative results. That's what they show, so I took it as evidence that film is (the only) currently profitable part of Kodak.

 

Now I'm no investment guru but on a simple level, the profitable part of a business would always be of interest to other companies.

 

Kodak have struggled to make a profit from their digital and other lines. As a purely 'film' company they would be profitable on this evidence, albeit on a smaller scale of course.

[mafoofan]

AlanG, the way I reached my conclusion was from a quick look at the financials on the Kodak website. Headline figures for Film are positive, the other divisions show negative results. That's what they show, so I took it as evidence that film is (the only) currently profitable part of Kodak.

 

Now I'm no investment guru but on a simple level, the profitable part of a business would always be of interest to other companies.

 

Kodak have struggled to make a profit from their digital and other lines. As a purely 'film' company they would be profitable on this evidence, albeit on a smaller scale of course.

 

Not to be rude, but this analysis is not only too simple, but ludicrously wrong. On its own, current profitability as measured by operating income says nothing about the value of an investment. The key point is that Kodak's film segment is declining. It is generating less and less revenue and lower and lower operating income. Even worse, as the company states, the decline is caused by shrinking industry volume. In other words, there's little to no reason to believe things can turnaround.

 

So, the financials suggest that buying Kodak's film segment would be an immensely stupid investment. A financial buyer is looking at shrinking cash flows and a future valuation that is likey to be lower than what it would currently pay to acquire the business. A strategic buyer faces the same problems, and has nothing to gain from entering a shrinking market.

 

I love film and am currently waiting for a new MP from Solms, but it seems pretty clear that Kodak's film business is a terrible place to put money.

[thebarnman]

Talking about film, all I keep hearing is how all theatres will be (or have to) switch over to digital projection. Movies will still be recorded on film, it's just the theatres will get the movies digitally.

 

I can't imagine the hit Kodak or Fuji will take with that.

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[stunsworth]

Movies will still be recorded on film, it's just the theatres will get the movies digitally

 

Unfortunately that's not true. The major movie camera manufacturers have stopped production of film cameras...

 

Film Fading to Black - Creative COW

[pico]

FWI, the facts I read today are posted below.

 

The most enthusiastic view in the world cannot overcome the reality of the situation. But you are welcome to keep your hopes up if that makes you feel better. Back in the early 90s I had lunch with some Kodak execs and they said their goal was to keep Kodak from being the Pullman Sleeping car company of the 21st century. [...]

 

Seriously? Was Kodak prepared to create a village for the workers, and then impose moral and social restrictions as Pullman did? Did Kodak suggest that they would own the employees' salary in trade for housing and health?

 

Tell us more.