I agree with the both of you.
After years of endless restructuring analysts are going to be gun shy and they will want to see results. And by the way - you may also have noted that EK managed a $17 million profit only after "mysteriously" lowering R&D costs $42 million. I think they REALLY felt compelled to show that profit this quarter...
Restructuring has consumed lots of money - in the end what else could Kodak have really done with what was left over? By my reckoning they will still have about $1.1 billion in debt (and not necessarily long-term at that) after the Health unit sale is compplete.
There's a part of me that believes that EK's foray into the ink jet printer market may well have more to do with the fact that entry into the market could be accomplished for a "mere" $400 million. Well, that and Perez having come from an outfit that is a leader in the market - which might impart some short-term credibility to the effort. And there are some industry analysts who, frankly, doubt that photo inkjets are much of a growth business. You need more than a $250 ink jet printer to produce the same quality output you can get at Wal-mart for $0.19 a print. And consumers are realizing that.
Minimally, I think the inkjet market is going to be rough sledding. The two words that come to mind are "price war" and EK's competitors have much deeper pockets with which to wage one.
Where the film operations are concerned - any time you try to sell something for which there would be relatively few perspective buyers - there's a lot of uncertainty about the price. I think you can make a case where both extreme scenarios (i.e. inkjet printers are a runaway hit or a failure) hasten a sale of the film operations. Both for different reasons.
Last edited by aldevo; 02-09-2007 at 03:11 PM. Click to view previous post history.