Kodak in danger of fading away

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#1
A grim reminder that any business, even an old, well-established one, may fade away due to changing technology and consumer preferences! It still must be "Buy and Monitor", not just mindless "Buy and Hold"!

The Straits Times
Oct 2, 2011
Kodak in danger of fading away

Company not filing for bankruptcy but its shares plummet

New York - Its legacy spans 13 decades, and boasts many American firsts, but Eastman Kodak, best known for cameras and photography, may be running out of options and time.

Concerns about its future boiled over last Friday, after it hired a law firm well-known for bankruptcy cases, sending its shares down 54 per cent to 78 US cents per share.

Although Kodak said it has 'no intention' of filing for bankruptcy, the fact that its shares closed under US$1, and market capitalisation shrank to less than US$300 million (S390 million), suggests investors may have lost faith.

The picture began to fade in September 2003. Film sales were dying, and Kodak slashed its dividend by 70 per cent, hoping to gain flexibility as it beefed up spending on commercial and inkjet printers, medical imaging devices and other digital systems. It stopped investing in traditional consumer film.

In January 2004, Kodak said it would trim costs by shrinking manufacturing and cutting some 15,000 jobs, or about 20 per cent of its workforce, over three years. Its workforce has since been pared to about 18,800 - 9,600 in the United States - at the end of last year, from 86,000 in 1998.

Kodak has been an iconic name in American business. Its history stretches back to inventor George Eastman's Eastman Dry Plate Company in 1881. By 1885, he had launched the first transparent photographic film.

The 'Kodak' camera hit the market in 1888, with the slogan, 'You press the button - we do the rest'. It rolled out Kodachrome, the first commercially successful amateur colour film, in 1935, but Eastman was unable to see its debut, having committed suicide in 1932.

Nearly a century later - in 1981 - its sales topped US$10 billion. It was ahead in the digital camera movement, with its Professional Digital Camera System in 1991 that enabled photojournalists to take electronic pictures with a camera equipped with its 1.3-megapixel sensor.

Mr Daniel Carp took over as CEO in 2000, right around the time that digital cameras started to become affordable.

Taking pictures without the use of film and the option to forgo printing proved a crippling blow to Kodak, which sold film, photo paper and the systems that develop film into prints.

Veteran Hewlett-Packard executive Antonio Perez joined in 2003, and became CEO two years later. He was instrumental in the shift to digital devices and services, hoping to outpace plummeting demand for film.

But some say that was already too late, since consumers had become enamoured with the ease of digital cameras, which allowed then to snap hundreds of photos without film or the need to make prints.

Today, most snapshots are taken with phones and viewed on Facebook, and it is tough to remember when Kodak's brand was stronger than that of the social media site.

Reuters
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#2
More sad update on a once great company...

Kodak posts S$502m loss but sees mid-2013 bankruptcy exit

NEW YORK — Eastman Kodak’s fourth-quarter loss more than tripled, but the camera pioneer yesterday said that it is on track to emerge from bankruptcy in the middle of this year as it shifts its business focus towards printing from photography.

Kodak’s quarterly net loss widened to US$402 million (S$502 million) from US$117 million, as net sales fell 24 per cent to US$1.12 billion, according to regulatory filings.

http://www.todayonline.com/business/koda...uptcy-exit
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#3
Kodak did not fail because it missed the digital age. It actually invented the first digital camera in 1975. Their strategic department has already identify digital camera as the next trend. However, instead of marketing the new technology, the company held back for fear of hurting its lucrative film business. Kodak thought that its new digital technology would cannibalize its film business.

Moral of the story - if you do not cannibalize yourself, someone else will. Strategy for a market leader is to cannibalize itself.
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#4
Kodak nears bankruptcy end with 2-for-1 UK pension deal

NEW YORK — Photography pioneer Eastman Kodak yesterday cleared the last two hurdles to ending its bankruptcy in one leap, with an agreement to sell its remaining non-core businesses to its British pension fund for US$650 million (S$802 million).

The pension plan also agreed to give up a US$2.8 billion claim against Kodak, resolving the largest unsecured claim against the company. The agreement is subject to approval by the Bankruptcy Court in Manhattan.

http://www.todayonline.com/business/koda...nsion-deal
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#5
Just to play devil's advocate.
Here's a view of Buy and Hold of Eastman Kodak. (full link here)

In short (extract from above link):

At the end of it all, before taxes, you are sitting on $425,319 from your $100,000 investment. Of this, $221,863 came in the form of cash dividends, which were mailed to you over the years. The other $204,136 is from, mostly, the market value of the Eastman Chemical shares, with a small amount available were you to liquidate the bankrupt Kodak shares, which have now been delisted.

Not only did you not lose 100% of your money, you actually compounded at around 5.5% per annum before taxes even with the near total wipeout of the Kodak shares. (It’s difficult to say what the after-tax figure would be because it depends on your income tax bracket and whether or not you held the shares in a tax-shelter or retirement plan of some sort. Then, in the midst of this holding period, dividend taxes were slashed to much lower rates than ordinary earned income. At the end, you’d also have a tax credit for the capital loss, which could shelter future income had you held your stock in a plain vanilla brokerage account.)


The thing about the tax shelter is from a US investor point of view.
Anyway, point is I'm not saying that monitoring your holdings isn't important.
What I'm saying is that even in extreme catastrophic scenarios, the return is still not that bad.
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#6
Well, the next phase would probably be smartphone camera. I am seeing Canon, Nikon and those who do digital camera to get into trouble if they follow the same path as Kodak by not improving.
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#7
I am glad that the Kodak brand will continue, albeit not the same as before...Big Grin

Kodak gets approval to exit bankruptcy

NEW YORK — Kodak, once a mighty photography pioneer, yesterday earned court approval for a plan to emerge from bankruptcy as a much smaller digital-imaging company.

The green light from United States Bankruptcy Judge Allan Gropper puts Kodak on track to exit bankruptcy in about two weeks.

Kodak, based in Rochester, New York, was for years synonymous with household cameras and family snapshots. It filed a US$6.75 billion (S$8.6 billion) bankruptcy in January last year, weighed down by high pension costs and a years-long delay in embracing digital camera technology.

With the approval, the company’s exit from bankruptcy is imminent, Chief Executive Antonio Perez said.

http://www.todayonline.com/business/koda...bankruptcy
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#8
I observed a lot of singapore companies listed on sgx but even when the company books show they are in negative capital, the text book will say that's a gone case company don't invest but I see it's hard to predict even then when the company will go in to bankruptacy, things can change, maybe move into new markets or new products or new ceo any of these things happen can turn things around in a few short years.

I remember mediastream was negative capital, yongnam was also negative capital, new ceo come in with new direction, new product in the case mediastream things change after a few years today these are once again darling counters hotly pursued. if You see penny stocks half cent don't write them off you never know.
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#9
Update on Kodak...

Photo pioneer Kodak exits bankruptcy with new focus

ROCHESTER (New York) — Kodak’s trip through bankruptcy is now a memory for the scrapbook as the photography pioneer, which invented the digital camera, emerged from Chapter 11 bankruptcy protection yesterday (Sept 3).

Eastman Kodak says it’s now a commercial imaging company serving business markets such as packaging and graphics. Chairman and CEO Antonio Perez says it’s on track for profitable growth.

“You can’t imagine how much I have been waiting for this moment ... This is a totally new company,” Chief Executive Antonio Mr Perez told reporters.

Kodak filed for bankruptcy protection last year, brought down by increasing competition, digital photography, and debt. Since then it has sold off many of its businesses and patents, while shutting down the camera manufacturing unit that made it famous.

It spun off its personal imaging and document imaging units to its pension plan.

Kodak says its old stock is cancelled as of yesterday. Creditors are getting shares in the reorganised company.

...

http://www.todayonline.com/business/phot...-new-focus
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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