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Donmck
01-26-2011, 07:55 AM
No good news--

http://topnews360.tmcnet.com/topics/associated-press/articles/2011/01/26/138289-kodak-4q-profit-drops-95-pct-misses-expectations.htm

Jeff Kubach
01-26-2011, 08:07 AM
It doesn't sound so good, I hope Kodak makes a comeback.

Jeff

jacarape
01-26-2011, 08:18 AM
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.

Naples
01-26-2011, 08:19 AM
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."

railwayman3
01-26-2011, 08:34 AM
"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. :(

railwayman3
01-26-2011, 08:37 AM
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."

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

Donmck
01-26-2011, 08:46 AM
also of great concern--

Kodak was depending on this to get them through the year---

http://online.wsj.com/article/SB10001424052748703555804576102601159265390.html?r u=MKTW&mod=MKTW

CGW
01-26-2011, 08:55 AM
Maybe Kodak should consider getting into the banking business.

alanrockwood
01-26-2011, 09:41 AM
With drastically falling sales and an uncertain product pipeline it is hard to see how Kodak will avoid bankruptcy.

jglass
01-26-2011, 09:46 AM
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 . . .

ntenny
01-26-2011, 10:58 AM
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

jacarape
01-26-2011, 11:00 AM
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.

rphenning
01-26-2011, 11:02 AM
wow. 53 million in the black to 3 million in the red. that's a slide. big sadface.

jnanian
01-26-2011, 11:23 AM
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.

jacarape
01-26-2011, 11:37 AM
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. :)

bblhed
01-26-2011, 11:51 AM
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.

Donmck
01-26-2011, 11:52 AM
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.

railwayman3
01-26-2011, 11:56 AM
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.



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.

Donmck
01-26-2011, 12:12 PM
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)

alanrockwood
01-26-2011, 12:18 PM
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.