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  1. #1
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    The future of Kodak film

    I've been thinking about this and discussing it with a number of people. Here is one thing that may be of interest to you all:

    http://www.businessweek.com/magazine...mpaign_id=yhoo

    Read the last two sentences, please. The second from last has not been noted here and is very significant.

    If Kodak continues in the film business, they sit on valuable property and sell a load of film and make a good income for the company. If they exit, as I stated elsewhere, we have either a 'new' film company, or a purchase by a group of investors.

    In the latter two cases, we have to consider that any new company formed around the film units of Kodak or an outright purchase would have to contend with the problem outined in the sentence I refer to above.

    Of course, a solely film company would have more interests in the customer but they would have some real problems.

    As one wag said in the paper here, and which I quoted elsewhere, "Kodak may want to sell the film business but who would buy it".

    Considering the reference above, I think this just might be true! This reporting explains one of the major reasons. Those who have commented to me either way may want to consider the words of this article carefully and especially the impact of that second from last sentence.

    Kodak may or may not stay in the film business. The decision appears to be balanced on a razors edge.

    PE

  2. #2

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    If they continue in the film business, however, might that not increase their environmental clean up problems? Just a thought.

  3. #3

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    IANAL, but in principle would it not be possible for Kodak to assume that liability as part of any transaction? Although it hasn't been paid for yet (or has it? Do we know for a fact that it's not already reflected in Kodak's accounts?), in an economic sense it's like a sunk cost. It's already been incurred and will have to be covered even if the film business vanishes without a trace tomorrow.

    Unless continued operation of the facilities is making the problem worse. That would certainly weigh not just on a sale but on any decision by Kodak to stay in the business itself.

  4. #4

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    I assume you are implying that the environmental cleanup costs are linked to the properties the film plants are located on. So would the costs then be transferred to anyone who bought the plants, or would Kodak have to remediate before they could sell them? It might discourage Kodak from pulling a Forte, if the land is too polluted to be sold for other purposes. Can remediation take place while the plants are running (i.e. if they shut down production all at once would they suddenly get hit with a major cleanup bill, and thus be more inclined to phase facilities out gradually)?

    That was one thing about the Forte plant closure I found odd; they say the property is worth more for the real estate value, but if anything I would expect environmental problems to be an even bigger issue in eastern Europe (unless lack of laws/enforcement means they can build subdivisions on top without cleaning it up).

  5. #5
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    I doubt whether Kodak would have to worry too much about environmental concerns regarding its film plant in China. That fact, plus cheap labour coupled with no effective unions is why manufacturers are falling over themselves to locate there.

    As for inkjet printers I wish Kodak well but they have left it a bit late as the market is dominated by just 4 makers - HP, Canon, Epson & Lexmark. Other people who tried seem to have given up, such as Olivetti & Xerox and Sharp didn't make any real inroads either.

  6. #6

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    This is the sentence in the article that seems most significant to me,
    "The digital world brings tougher rivals, lower profits, and increased investment needs."
    Even though digital is everywhere, I keep hearing that not many firms are making profits out of it. You need to find a strong niche & dominate, something that firms like Sandisk appear to be doing. I'm not seeing any indication that Kodak have found their place yet. They might still be grateful for the cash that film keeps rolling in.

  7. #7

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    I think "Goldie's" point is pretty solid. Nice point.

  8. #8

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    Look t the bright side. If Kodak exits and doesn't sell, Iflord will be in first position and no longer tied which will ensure their future as being film king.

    So in reality I don't really see this as bad news.

    Also in terms of environmental hazards why does no one ever address the fact s of the hazard digital has on he environment; LCD’s, Monitors, Computer, cds, dvd, ink cartridges, printers, memory card, NiCad batteries, etc... And what of the landfill issues as well as these materials do not decompose and almost no one ever returns cartridges to the manufacturers when they purchase new ones to replaced the ¾ empty ones?

  9. #9

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    Again, ...Kodak can sell the film business and retain the environmental liability for clean up...or the buyer simply won't buy the real estate, but instead lease it from Kodak and let them retain the liability...but this certainly will be an issue in any sale.....

    At the end of the day, does film cash flow and generate a decent ROI for investors? Or, is it a cash drag or a distraction from their key strategy (digital, which could be a reason) OR, sell it because you NEED the selling price cash to grow the digital side...

    And Kodak does have substantial debt - it's balance sheet aint all that great.

    Aren't these guys a little late to the digital scene? And the digital camera scene is highly competitive, with tough margin pressure.

    Wow, did prior management screw this thing up. Like, they didn't see it coming?

    I think they are TRYING, Hoping, Praying to find A place...like "Gee, I guess film will eventually go away.....and we are in the Kodak Moment business,,,so I guess this means we should do something in the digital world, so we can try and make money so us execs and board members can have a job?"

    What worries me more is that the rest of the world (china in particular) are skipping right over film to digital....not good for future prospects of film....

    I loved reading the comment perez made about the Board deciding on what to do with individual business units...."it will be up to the Board to decide what is the best option" - now THAT's what I call leadership....

  10. #10

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    Kodak exiting is not looking on the bright side.
    Ilford doesn't make 100UC.

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