Kodak reports---

Discussion in 'Industry News' started by Donmck, Jan 26, 2011.

  1. Donmck

    Donmck Member

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  2. Jeff Kubach

    Jeff Kubach Member

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    It doesn't sound so good, I hope Kodak makes a comeback.

    Jeff
     
  3. jacarape

    jacarape Member

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    That's sad. I'm not a fan of the new company, but I really think it will be split up in the near future. Like a drunk that lumbers up to a bar for a drink after last call was shouted 3 times, Kodak has missed all of the boats.
     
  4. Naples

    Naples Member

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    The huge drop in profits is largely due to the artificially high profits "a year earlier when results were swelled by $421 million in licensing and royalty revenue."
     
  5. railwayman3

    railwayman3 Member

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    "Traditional film–based revenue slid 25 percent to $439 million, hit by volume declines and surging costs for silver and aluminum. The photographic film, photofinishing and entertainment film unit posted a $3 million operating loss in contrast with $53 million in operating profit a year earlier."

    So it seems that the film business is no longer a cash generator for the rest of the business. Presumably "entertainment film" comprises all the movie film products as well, which makes it even worse? "Photofinishing" presumably also includes products and services for consumer prints from digital cameras?

    Just expectations of something round the next corner....and even those seem to centre mostly around consumer inkjet, where, of course, they have some very serious and heavy competition from the established brands of HP, Epsom, Canon, etc. And, in recessionary times, people are not going to be replacing their current printers just to get a few extra lights and whistles.

    Maybe time to stock up on favorite Kodak films while we still can. :sad:
     
  6. railwayman3

    railwayman3 Member

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    Agreed...but, of course, unless those royalty revenues are replaced, the current results are the numbers which matter. :sad:
     
  7. Donmck

    Donmck Member

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  8. CGW

    CGW Restricted Access

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    Maybe Kodak should consider getting into the banking business.
     
  9. alanrockwood

    alanrockwood Member

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    With drastically falling sales and an uncertain product pipeline it is hard to see how Kodak will avoid bankruptcy.
     
  10. jglass

    jglass Subscriber

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    Maybe some rich, crazy genius like Florian Kaps, the Impossible Project guy, will swoop in and buy the film division and make it into the American Ilford! Tri-x, Plus-x, the Tmaxes, Portra, Ektar, a couple of slide films and the movie films. One can wish . . .
     
  11. ntenny

    ntenny Member

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    Well, the film division's numbers are a fairly small loss in a single quarter, so I wouldn't rush to "the sky is falling" just yet.

    Based just on that first article, it sounds like Kodak's plan is to turn itself into a digital-output operation centred around consumer inkjets and professional digital "printing press" systems---that's not a trivial market to survive in, but it isn't an obviously futile or crazy effort. (The consumer part is already quite crowded, though: I would assume Kodak is at best in fifth place now, behind Canon, Epson, HP, and Lexmark! That's got to be quite a hill to climb.)

    If I were Kodak---which obviously I'm not---I'd be keeping my eye on that ball and waiting to see if film revenues recover in the next few quarters before rushing to any decisions. But they may have foreknowledge of where the cine industry is going, for instance, that would affect that thought process. (I've done some digital-cinema work, and my feeling is that 3D is a fad but it may end up being a fad that drives a general switch to digital projection, which anyway is inevitable for logistical reasons.)

    -NT
     
  12. jacarape

    jacarape Member

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    jglass, I think the major obstacle to that is Kodak has an over capacity and struggles produce film profitably. That would be compounded by a world wide glut in capacity. A foolish plan to buy into.

    Their CCD/CMOS tech especially space based imaging could be rolled into Rockwell International. Pro level digital backs have a market, and Kodak is a leader but I don't believe there is any cross fertilization between the two divisions. That would be another divested division.

    As reported in the article, Kodak is entering into a field that is already crowded with strong tech companies. My personal opinion is that they will find it difficult to compete which will kill their R&D budget, which will wither the effort. I feel that the effort will match the DCS line of pro dSLRs.

    Their consumer line of P&S cameras are all Easy Share. My personal feeling is a product named after a marketing slogan is pretty weak. But they are shouting that line from here Andromeda. I rarely read DPR, but the last time Kodak had a product that was recommended was in 2007. They really have 0 presence on line. Consumer p&s cameras are commodities, hey may as well be selling bushels of wheat. They don't innovate there nor offer anything above a Wal*Mart level.

    What Kodak has is brand recognition but there is a problem there also. When AT&T was bought by the Baby Bell SBC, SBC changed their name to AT&T. AT&T had a very, very strong name in telephony, nobody in Joisey had ever heard of SBC. You would have a tough time selling that brand.

    The Kodak legacy is just that, a legacy product that is part of history, not the future. (I could see a Chinese Lucky Seagull Happy Easy Share camera with a Long March edition.) Kodak is a museum moniker. Their past track record of digital is one of good starts then abandonment, DCS Pro dSLRs, the DCS Proback.

    This is just my opinion, the company has very little future. Anyone that has ever invested in a 401k or bought shares as part of a savings plan would look at it in this light.
     
  13. rphenning

    rphenning Member

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    wow. 53 million in the black to 3 million in the red. that's a slide. big sadface.
     
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  15. jnanian

    jnanian Advertiser

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    maybe if they stopped advertising on the cartoon network, and
    started advertising + distributing their products " like they used to "
    they wouldn't be as bad off as they are.
     
  16. jacarape

    jacarape Member

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    First they need products to advertise?

    Or maybe the Flintstones Barney Rubble Easy Share? With the Kodastone mode, oh yea I'm getting all wiggley. :smile:
     
  17. bblhed

    bblhed Member

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    Hold on, let me get this straight, the "dieing" film business generated almost a half a billion in revenue last year? The company I work for didn't do that and we are a thriving entity.

    As for the rest of it, restructuring always shows losses at first, and they are running in 6 directions right now. The new line of digital cameras looks good, and maybe they will get a single working printer design and keep it until it turns a real profit. I really don't see this company dieing just yet.
     
  18. Donmck

    Donmck Member

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    Kodaks core business has always been consumables--film,paper,processing,via the Brownie/Hawkeye/Instamatic.

    If they survive their core business will be consumables---ink,paper,online processing/sharing.
     
  19. railwayman3

    railwayman3 Member

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    Presumably the company which you work for, whatever its actual revenue, makes a steady annual profit, and that's why it is thriving ?

    Revenue means little in itself unless, at least in the medium term, it generates profit.
     
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  20. Donmck

    Donmck Member

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    railwayman-

    I believe Kodak has had only one profitable year since y2k--
    I think it was '07

    they borrowed $500M? from KKR @10% and if I remember right they used most of that to buy back stock @ $13+(now @ &3.74)
     
  21. alanrockwood

    alanrockwood Member

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    The key here is that revenue is declining. There are basically three scenarios. 1) Revenue may asymptotically approach zero. 2) Revenue may stabilize at some relatively low level. 3) Revenue may reverse and go up.

    Under scenario 1 the company eventually goes bankrupt. Under scenario 2 it all depends on where the stable value is for revenue and also whether it is enough to sustain a business. Related to this is the question of whether a large company that is a market leader in its segment can shift gears and operate as a small company that is an also ran in its segment. Under scenario 3 the future looks relatively bright, though success is not assured.

    As to profits, I would not put too much emphasis on one quarterly report, or even one yearly report. One-time events and various short term fluctuations have too much effect to put much weight on short term results. Longer term trends are more important, and besides, cash flow is even more important than profits.

    What seems clear, in part because Kodak themselves tell us this, is that they intend to use profits generated by their film business to finance a shift to different businesses, such as digital imaging. It is by no means clear that they can succeed in a new line of business, particularly since they don't seem to be offering anything that puts them ahead of the established competition.

    As to selling off the film business, a shrinking business is not going to attract a top dollar offer. It seems to me that they would maximize their profit by keeping the business and milking it for all they can before it becomes essentially worthless. At that point they might spin it off in a management buyout, which could then either go the way of Agfa (kaput) or Ilford (possibly here for the long term.) Of these two I suspect that the Agfa model is more likely. I hope I am wrong.
     
  22. jnanian

    jnanian Advertiser

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    they have plenty of products to advertise but in the last 10 years ( or more )
    they stopped advertising the part of their business that they depended on to carry them through their time
    of transition, but instead of advertising their core products,
    the products people know and trust ..
    they announce to the world that film based photography is dead
    and try to sell inkjet printers on the cartoon network ?
    they wonder why they are doing so badly ?

    just seems kind of like a self fulfilling prophecy ...

    oh well ...:sad:
     
  23. lns

    lns Member

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    The sky is not falling. Here's a better, more complete look at the numbers: http://investor.kodak.com/phoenix.zhtml?c=115911&p=irol-newsArticle&ID=1519991&highlight=

    Kodak's cash position is good, in fact it appears they have more cash this year than last year. With respect to the film business, Kodak attributes the small loss (only $3 million) in the fourth quarter to the increased cost of raw materials and the decline in sales volume. I hope this serves as a warning for those who jump all over Ilford for raising prices. Despite the fourth quarter loss, earnings from operation were positive in 2010 for the film division. Put more plainly, the film division made money from operations in 2010.

    That said, Kodak continues to broadcast that it does not consider film a growth area or a core strategy, going forward. That is a reasonable conclusion for the company. I hate to sound like a broken record, but right now the film division still is useful for the cash it provides. We really can't know whether Kodak will succeed in the areas Perez has identified. If it doesn't create a soundly profitable business there, or even if it does, eventually it will cease producing film. That doesn't mean the film will go away, just that Kodak will no longer make it.

    Reading this, I would bet that Kodak will have to raise prices for its film products and possibly keep paring away at its offerings, to keep film profitable.

    -Laura
     
  24. Ian Grant

    Ian Grant Subscriber

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    It's easy to knock kodak but we should try to supports their film division and also Ilford Foma, Fuji etc if they have the products we want to use.

    I was using Tmax films and only stopped because I just couldn't get them, that's poor marketing etc by the corporate body not the film division. That correlates to jnanian's comments about their advertising. When I switched the price differential meant a saving compared to Tmax as well, but it's a bit of a see-saw know.

    Laura's right though to point out there's another side to the figures apart from the headlines, and it's really not looking like Kodak's becoming another Epson or HP easily. They needed a more dynamic CEO to re-invent the company not copy others.

    Ian
     
  25. jacarape

    jacarape Member

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    Ins, please keep in mind the following on the URL referenced.

    "Certain statements in this document may be forward-looking in nature, or forward-looking statements" as defined in the United States Private Securities Litigation Reform Act of 1995. For example, references to the Company's expectations...".

    Ian, nobody here is "knocking" Kodak. In order for EK to sell film, they have to make money on both film and digital. I'm not convinced they can. If you go to kodak.com, look at their digital offerings, thin. They list 8 printers, more than the number of Easy Share cameras listed. Both of those products are swamped by the number of digital picture frames.

    The DCS Pro dSLR was one of the very first that carried a FF sensor, the DCS Pro back was for a time the best on a price to performance ratio on the market. I believe that EK dropped the ball on transforming the company into the "digital age". I'm not knocking the company, I just don't believe they can do what they say. It's us film users that have shot Kodak products that suffer from their poor corporate governance. FWIW, all of the boxes in my fridge are yellow (until I can get some Pan-F at least).
     
  26. Sean

    Sean Admin Staff Member

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    Well.. people around here can get 4x6 prints for next to nothing. No consumers I know are going to spend a fortune on ink and papers when they can just pop over to a tech store and get 1-3c prints (I think they do this now at a loss just to get people in the stores). I would say around $6 NZ for 200 4x6 prints. In NZ 200 sheets of 4x6 inkjet paper would be over $60 NZ, not sure how much ink is required to print 200 photos.. maybe $40 NZ or more? So Kodak is going to be saved by people choosing to spend $100 or more on a batch of prints vs. $5-7 getting it done at a shop? I suppose they are talking about commercial ink sales but it seems that is a very tough market Epson, HP, Canon..