kodak is consolidating its film business..

[sbelyaev]

An interesting article.
I've heard similar suggestions from APUG members a while ago.
May be Kodak is reading this forum? )


http://media-newswire.com/release_1060650.html

[dphill]

Quoting from the article,

"silver-halide photographic paper and chemistry"

I can understand the chemistry part, but does "silver-halide photographic paper" mean anything but color paper?

Dan

[Rlibersky]

Sounds like a sale to me. Not that there would be anything wrong with that. In fact I believe it would be good.

[lns]

Sounds to me like they plan to milk the film business for cash to grow the digital business. Not necessarily a bad strategy for the company. It might mean the end of innovation in the film business, but at least it sounds like they'll keep the lines running. Until margins decline too much. That's when they'll try to sell the division, or shutter it. Just my two cents. -Laura

[Ed Sukach]

An interesting article.
I've heard similar suggestions from APUG members a while ago.
May be Kodak is reading this forum? )
http://media-newswire.com/release_1060650.html

Sounds an awful lot like the average run-of-the-mill beef by-product... "We are gonna ..."
What would impress me would be, "We are going to stop talking and start **DOING**.

Something interesting: Go to the sites linked at the end of this article... "Weldon" and "PsPrint". I'm not sure how they got there - or if they should be there - they seem out of place ... but they seem to offer useful services.
I've bookmarked them.

[gr82bart]

Something interesting: Go to the sites linked at the end of this article... "Weldon" and "PsPrint". I'm not sure how they got there - or if they should be there - they seem out of place ... but they seem to offer useful services.Those are Google ads.

Here's the article directly from Kodak: http://phx.corporate-ir.net/phoenix.zhtml?c=115911&p=irol-newsArticle&ID=1105580&highlight=

Listening to the webcast was also interesting, especially listening to Mary Jane Hellyar, President of Kodak Films Group, talk about traditional film.

Regards, Art.

[PHOTOTONE]

The way I read the story, Kodak has reorganized its Film, paper & chemical business to be profitable and sustainable for the foreseeable future.

[Jim Noel]

"I can understand the chemistry part, but does "silver-halide photographic paper" mean anything but color paper?"

black & white paper is silver halide. Halides include chlorine, bromine, iodine and one other which slips my mind at the moment.

[aldevo]

When Kodak announced its earning a couple weeks ago there were a lot of analysts asking if there were plans for further breakups (e.g. like the sale of the Health imaging unit last year) within the company. Perez responded that he didn't think it made much sense to do that.

At this stage I think an outright acquisition of Kodak would be more likely than a breakup but I don't claim to have any special knowledge here.

I'm more concerned about when TMY2 will appear in local stores...

[dphill]

It confuses me as they are no longer making B&W paper.

Are they referring to their color paper?

I should have been more direct in my question.

Dan

[PHOTOTONE]

It confuses me as they are no longer making B&W paper.

Are they referring to their color paper?

I should have been more direct in my question.

Dan

Yes, they are referring to their color papers, as they too use silver-halides just like b/w paper does, but the silver is bleached and fixed out in the final print leaving only color dyes.

It has to be the color papers as they haven't made b/w papers in 2 years, and the plants have been scrapped that made b/w paper.

[michael9793]

It sure seems to me that kodak is consuladating all it's traditional products into one separate company so when it comes time to dissolve it it will not affect their digital business or even show up as connected to it. Since they don't make paper anymore it just seems funny how they would include that in the statement, unless it is for the nonphotographer stock holder to see. Ones that have no idea what it meant. just that it seemed right so Kodak would be stronger.

michael andersen

[gr82bart]

Here are my notes from the webcast to analysts last Thursday. The cast was tied to the article in question.

My summary of Perez' comments:

Restructuring is complete
Strength in science: Materials Science and Digital Imaging
Developed a sustainable traditional business model
50% growth in digital products
Future digital model based on 'annuities' revenue generated by their output products


My summary of Mary Jane's comments:

Traditional business is poised for sustainability - KEY message
Solid profit outlook in the entertainment imaging business is critical to sustainability
Profitability is strong, but will drive even stronger numbers
Focus on cost reduction will continue - application of Lean (http://www.lean.org/) and Six Sigma (http://www.isixsigma.com/sixsigma/six_sigma.asp) - expand to order to cash (http://www.ebstrategy.com/selfservice/composite/order_to_cash.htm) value stream
Beat declining revenue forecast with cost reductions
Book value (http://beginnersinvest.about.com/cs/investinglessons/l/blles3bkvalue.htm) in all film assets will be written off in the near future - $3.1 billion to $700 million to virtually zero
Sensitizing locations from 10 to 2, warehousing locations from 25 to 4
Success in variablizing go to market (http://marketingpr.suite101.com/article.cfm/your_go_to_market_plan___three) costs for film capture business which was once very much a fixed cost (http://en.wikipedia.org/wiki/Fixed_cost) business
Confidence in forecasting market and profitably manage declining business

Current state

Traditional photofinishing - $1.2 billion, high single digit revenue decline
Entertainment - $1.1 billion, low single digit revenue decline
Film capture - $500 million business - significant revenue decline - but a very small part of the overall traditional film portfolio - was the largest segment in Kodak, now one of the smallest
Other film products - $300 million, mid single digit revenue decline
Total top line 12-14% decline in revenue, but each area contributes strong cash (I assume she means profit), year over year for foreseeable future

Focus on margin expansion and profitability in the traditional photofinishing business

In 07 largely driven by cost reductions
Reduced employment by 35%, reduced footprint, sold off assets
Focus in future is on growing mix of the business (http://e-competitors.com/Strategy/CorpatePlanning/CorpOverview/business_mix_selection.htm) - what is most profitable
Step up marketing and growth on the professional markets which includes products - papers like Ektalure will be heavily marketed, photochemistry, moving beyond 4x6 prints to photobooks (http://en.wikipedia.org/wiki/Photobook)
Asia and Latin America have higher margins
Selective innovations - products with lower production costs

Entertainment business continues to lead this division

2% revenue decline last year, over half can be directly correlated to writer's strike
Entertainment industry continues to enter multi-year contracts

Print business is driven by first run cinema screen (http://www.patentstorm.us/patents/6407798-description.html)

First run cinema screens are those that are sent out ahead of the actual cinema release
Less than half are in the US and Canada - broadly distributed in Europe and Asia
Penetration of digital is fastest in US and Canada - 11% year over year
Industry (http://en.wikipedia.org/wiki/Film_industry) structure is cause for high digital penetration - in US chains of upwards of 1000+ screens that they own versus foreign countries where cinema may be still regulated and / or independently owned with fewer screens per owner - high cost for digital conversion is prohibitive
3.5% growth in new screens distributed evenly throughout US, Asia and Europe
In Asia, 85% of new screens are film screens, 55% in Europe, in US and Canada all new screens are digital - reason why traditional film is still being produced at a measured declining pace
Impact of digital remains small - 7% worldwide of first run screens have been converted to digital
In total the colour film impact was 1% decline
Quarter to quarter volatility is matched to release patterns and churn rates by the industry into the theatres
Planning number matches Screen Digest (http://www.screendigest.com/) forecast which is the standard bearer
Sensitivity analysis (http://sysdyn.clexchange.org/sdep/Roadmaps/RM8/D-4526-2.pdf) is embedded in the sustainability model

Film capture is highly segmented category - characterized by strong digital displacement

15% digital displacement mostly due to TV segment and commercials (ads)
Episodic dramas and motion picture releases are nearly 100% film
Innovation will be in motion picture film - recently introduced Vision 3 film

Redirecting Kodak Park capacity to third party business

Absorb fixed costs and generate revenue
27 current external tenants
Plan is to create an industrial campus (http://en.wikipedia.org/wiki/Industrial_park)

Kodak display business

Will continue to invest in OLED technology (http://en.wikipedia.org/wiki/Organic_light-emitting_diode)
Generated 105 patents
Strengthen relationships with backplane display (http://206.106.174.125/active.htm) companies - LPL and Samsung are examples
Choice not to manufacture backplane technology but to partner with leading companies
A couple new products in the works for release in the near future

Final Summary

Continue to reduce costs
Expand Lean and Six Sigma initiatives
Drive profitability improvements in photofinishing business
Maximize margins and profitability in all product areas
Increase revenue generation in Kodak Park facilities and partnerships


My comments:
As I have stated and/or implied in many threads, Kodak is a complex business and those that think film is 'easy' or can be 'sold off' easily are kidding themselves. The business is heavily tied to the entertainment industry and essentially, still film is a by-product. I hope Kodak's forecasts are accurate in that they can conservatively manage their film products in a heavily declining market. If that's the case, we (still film photographers) will continue to have products for the long run.

Regards, Art.

[PHOTOTONE]

Since they don't make paper anymore it just seems funny how they would include that in the statement, unless it is for the nonphotographer stock holder to see. Ones that have no idea what it meant. just that it seemed right so Kodak would be stronger.

michael andersen

You are just wrong in your assumption. Kodak DOES make miles and miles of paper. It is just Color paper. All they stopped making was b/w paper. If you go to a mini-lab your prints will either be on Kodak or Fuji paper..there are no other choices. This is RA-4 style processing photosensitive paper..not inkjet or dye-sub. The Kiosks uses dye-sub..the main mini-labs such as the Fuji Frontier use RA-4 chemical processing paper, it is the most economical way to get color prints. Just because a machine says Fuji on it, doesn't mean it has Fuji paper loaded in it. In fact, Kodak just introduced a new Ultra paper. And, of course, this RA-4 paper is used to produce color prints from both film negatives, slides and digital files, so it is not an obsolete or declining process.

[gr82bart]

It sure seems to me that kodak is consuladating all it's traditional products into one separate company so when it comes time to dissolve it it will not affect their digital business or even show up as connected to it. Since they don't make paper anymore it just seems funny how they would include that in the statement, unless it is for the nonphotographer stock holder to see. Ones that have no idea what it meant. just that it seemed right so Kodak would be stronger.Sorry Michael, but I have no idea how you can draw that from the Kodak article.

1. Their digital business is heavily connected to their film business. What they have done is segmented their groupings into more market categories versus product categories. Their Film, Photofinishing and Entertainment Group is actually a 'hybrid' process flow, as Mary Jane outlined. The dependency of film and digital to that group is heavy.

2. Kodak makes lots and lots of colour paper. All the paper used in minilabs and 1 hour labs are mostly Kodak paper.

3. With all due respect, it's statements like yours that actually continue to perpetuate the myth that Kodak doesn't care about film at all. It does deeply and it's future is dependent on film.

Regards, Art.

[cmacd123]

The Motion picture business is still strong, and they are combining it with teh other Film and paper units (motions picture is known in Kodak Speak as "entertainment imaging" and still uses Miles of 35mm print film.) Entertainment imaging is just introducing "vision 3 500T film" for MP use, so they are still spending some money where they have profit.

Sounds like still film, Photofinishing (includes colour paper) and Graphics are now in the same group as MP film. Maybe we will all have to use ECN2 as a process for our own pictures.

[Goldfellow]

Looks like there is confusion on what Kodak meant saying they are moving "silver-halide photographic paper and chemistry" back to the Film Products Group. This language was chosen as the announcement covers the traditional silver based papers, and not the the thermal media used in kiosks. As silver based papers are made using the same people and machinery as film, it makes sense to have them under the same Film Products division. Kiosks are sold by the Consumer Digital group, so thermal media remains with that group.

[PHOTOTONE]

division. Kiosks are sold by the Consumer Digital group, so thermal media remains with that group.

But let us not confuse "mini-labs" with Kiosks. Kiosks use thermal media (Dye-sub) and Mini-labs use RA-4 traditional chemistry processed color paper. Often Kiosks and Mini-labs are combined in one location.

[michael9793]

Looks like there is confusion on what Kodak meant saying they are moving "silver-halide photographic paper and chemistry" back to the Film Products Group. This language was chosen as the announcement covers the traditional silver based papers, and not the the thermal media used in kiosks. As silver based papers are made using the same people and machinery as film, it makes sense to have them under the same Film Products division. Kiosks are sold by the Consumer Digital group, so thermal media remains with that group.

there is no paper buisness left in the silver field. if there is can someone tell me what they are producing. AZO????? not!!!!:D

[tim_walls]

there is no paper buisness left in the silver field. if there is can someone tell me what they are producing. AZO????? not!!!!:D

Colour paper is silver based. The RA4 BLIX removes any silver from the finished print, but the original paper is silver halide based. It needs to be sensitive to light somehow, after all :).


(Edit: Just noticed PHOTOTONE said exactly that at the top of this page... I wonder how many times we need to go round the same question/answer in this thread...?)