Kodak hints at sale of film unit...

aldevo · Jan 31, 2007

http://www.marketwatch.com/news/sto...4905-B4DA-DB004FFF4EE2}&siteid=yhoo&dist=yhoo

No big surprise, I expect. Many of us implicitly assumed this was possible but I believe this is the first public acknowledgement of the possibility by a company officer. I suspect their prognosis for finding a buyer would be much better than Agfa's attempt to find one several years back for their film unit. So even if this does come to pass - it may not mean the end of Kodak films. At least, not in the near-term.

Obviously, nothing has happened yet and we will need to wait and see.

Ted Harris · Jan 31, 2007

Not to mention that film production is a cash cow with all the physical facilities long since amortized ....

Nick Zentena · Jan 31, 2007

Lots of money sloshing around. If the film division is generating positive cash some body will buy it. The question is how sharp will their knives be when it comes to making it even leaner then it is now?

copake_ham · Jan 31, 2007

Oh no! Here we go again.

Can't we just keep the same thread as a "sticky" and just change the title every few days?

All the same old, same old posters (like me) will not engage in the same old, same old discussion/debate etc.

And all Perez said was something that everyone else has been saying for years. Will, should, could Kodak sell the film division?

And, BTW, did he say it as part of his presentation - or was it as an answer to an analyst's question?

The "Street" has been predicting the run down of the film division for years now. So if it was a response to a query - it might be nothing more that a sop to a pesky analyst!

K's problem is that selling the film division means selling a core business. That is a decision not taken lightly since if they miscalculate - they could sink the firm.

We'll see - meanwhile let the "usual posts" begin!

aldevo · Jan 31, 2007

copake_ham said:
Oh no! Here we go again.

Can't we just keep the same thread as a "sticky" and just change the title every few days?

All the same old, same old posters (like me) will not engage in the same old, same old discussion/debate etc.

And all Perez said was something that everyone else has been saying for years. Will, should, could Kodak sell the film division?

And, BTW, did he say it as part of his presentation - or was it as an answer to an analyst's question?

The "Street" has been predicting the run down of the film division for years now. So if it was a response to a query - it might be nothing more that a sop to a pesky analyst!

K's problem is that selling the film division means selling a core business. That is a decision not taken lightly since if they miscalculate - they could sink the firm.

We'll see - meanwhile let the "usual posts" begin!

I've no bone to pick to Kodak, actually (I use plenty of Tri-X and the odd roll of E100G). It is, however, notable in that this is the first time that somebody posed the question to a CEO of Kodak on an earnings call.

And the answer is "possibly, maybe". Yes, it's not a decision to take lightly but there is no denying that, short-term balance sheet considerations aside, film isn't the strategic focus of Kodak long-term. I don't think it's a "sop" either - C-level excecutives have to be really careful about managing expectations and a perspective sale of the film unit will likely set their hearts aflutter...

Also, it's possible a private equity buyout of Kodak's film unit would be the optimal outcome for APUGers. It may even help keep jobs in Rochester. Who knows?

This isn't something to be taken as a "the sky is falling" post, nor is it intended to turn sentiment against Kodak, but I believe it is of relevance to the forum.

aldevo · Jan 31, 2007

Ted Harris said:
Not to mention that film production is a cash cow with all the physical facilities long since amortized ....

Not a cash cow, exactly, but the depreciation does go back on the cash flow and that helps Kodak borrow money when needed.

The unit is operationally-profitable but the restructuring charges really do wipe out much of the bottom line benefit. Much of the largest restructuring efforts are already complete, thankfully. I think about 23,500 of the planned 27,000 layoffs are already over.

That it is operationally-profitable is a radically different situation than was the case at Agfa's film unit. Agfa never managed to sell of their film unit (AgfaPhoto was really a management buyout) but I think EK probably could do so.

Curt · Jan 31, 2007

I feel sorry for the b******s over at Kodak, they don't know whether to s**t or get off the pot.

Poor leadership from a poor company.

It doesn't bother me, I went out and shot four rolls of Ilford Pan F 120. I really like it now that I am using it enough to see what it will do. In the mean time I made base plate for for one of 8x10 cameras and fixed a broken knob on a ball head. Stripped out at the end of shooting today. Never expected it. At least it was not a d****l camera part that is not fixable! I get some enjoyment out of drilling and tapping, cutting and buffing. They built it to last and it can be fixed. Something to think about in my building of the next camera when the weather warms up.

Love that Ilford film!

HerrBremerhaven · Jan 31, 2007

aldevo said:
I've no bone to pick to Kodak, actually (I use plenty of Tri-X and the odd roll of E100G). It is, however, notable in that this is the first time that somebody posed the question to a CEO of Kodak on an earnings call.

What sort of answer would you expect? If any company were asked, in a similar manner, if you had a division that was no longer profitable, might that division be sold. Now what other answer would you expect?

aldevo said:
And the answer is "possibly, maybe". Yes, it's not a decision to take lightly but there is no denying that, short-term balance sheet considerations aside, film isn't the strategic focus of Kodak long-term. I don't think it's a "sop" either - C-level excecutives have to be really careful about managing expectations and a perspective sale of the film unit will likely set their hearts aflutter...

Do you have some stake in the stock market, EK or otherwise? It sure seems that you are posting due to some vested interest. Care to disclose anything?

Do you actually read the SEC reports for EK, or only the summary from some news item? If you understood the cause of losses, and sources of profits, your postings would be substantially more well informed.

aldevo said:
Also, it's possible a private equity buyout of Kodak's film unit would be the optimal outcome for APUGers. It may even help keep jobs in Rochester. Who knows?

This isn't something to be taken as a "the sky is falling" post, nor is it intended to turn sentiment against Kodak, but I believe it is of relevance to the forum.

In my opinion it has almost no relevance, other than to potentially cause some sort of panic, or possibly to influence share prices in EK or competitors. Speculation is best left to a stock market forum, not APUG. I think this thread should be shut down before it gets too ridiculous.

Ciao!

Gordon Moat
Dead Link Removed

copake_ham · Feb 1, 2007

HerrBremerhaven said:
What sort of answer would you expect? If any company were asked, in a similar manner, if you had a division that was no longer profitable, might that division be sold. Now what other answer would you expect?

Do you have some stake in the stock market, EK or otherwise? It sure seems that you are posting due to some vested interest. Care to disclose anything?

Do you actually read the SEC reports for EK, or only the summary from some news item? If you understood the cause of losses, and sources of profits, your postings would be substantially more well informed.

In my opinion it has almost no relevance, other than to potentially cause some sort of panic, or possibly to influence share prices in EK or competitors. Speculation is best left to a stock market forum, not APUG. I think this thread should be shut down before it gets too ridiculous.

Ciao!

Gordon Moat
Dead Link Removed

Gordon,

Thanks for this post.

I don't know for sure, but every once in a while aldevo appears with another K is dead, or dying or, maybe just sick or whatever post.

And on and on and on.

Like the proverbial guy who comes to the party just to throw a dirty sock in the punch bowl!

It's unfair, here you know. If you try to shut off every thread that mentions Kodak you will miss some great news like where to get free film.

But if you keep looking, you get these kinds of threads. The doomsters, sometimes motivated by either a personal death wish or hysteria will ruin your day.

Then again, you have to wonder if some of these posters are digi-plants who come on here just to spread "bad news about film" stuff.

Has anyone here ever seen aldevo post to a thread that didn't deal with either negative news about Kodak and film (specifically) or "the death of film" generally?

gr82bart · Feb 1, 2007

I concur George. There are some posters who are just so predictable.

Not to mention the ones that think they can run a multi-national better than everyone else. Makes you wonder what they're doing in the middle of the dessert trying to fix their beat up old camera on a dime. Spare us the ego.

Regards, Art.

Soeren · Feb 1, 2007

there is mentioned a 15% drop in sales of film. Why is that?. How is Ilford doing in comparison? If The Kodak CEO talks bad about film, which he did, how can he expect people to keep supporting kodak? I mean why start using kodak films if they are to be discontinued in a couple of months? I think thats the reason why its 15% and not only 5%. When you look at the prizes Ilford films are cheaper than Kodak so................. :rolleyes:
Cheers
Søren

jstraw · Feb 1, 2007

I have no opinion about this rumour, other than to that if Kodak were to sell off it's film division, wouldn't that be cause for celebration?

Think about it. Wouldn't a new owner with fresh capital at risk in the success of the operation be a demonstration of greater stake and commitment than a current owner that sees a shrinking market and that has realized full depreciation on the assets?

The implied sword of Damocles over Kodak's film division...that it could simply be closed, the equipment sold for scrap and the real-estate put on the auction block...that would go away.

I'm not sure this is a doom and gloom rumour at all. More like pie in the sky, if you ask me.

Roger Hicks · Feb 1, 2007

gr82bart said:
Not to mention the ones that think they can run a multi-national better than everyone else.

Not everyone else. Just Carp, Fisher and Perez.

Cheers,

R.

Bob F. · Feb 1, 2007

Doom & Gloom Forum material methinks.

There is nothng in that report that is new re' Kodak's intentions for its film unit. "If it does not make a profit, we will do something about it" is hardly earth shattering information. What company would continue to support a loss making unit for long?

This silliness is getting really, really boring.

Moderators: do your duty!

Bob.

Photo Engineer · Feb 1, 2007

At the present time the film (B&W and color) and color paper units are making a healthy profit for Kodak. There is even some R&D going on, believe it or not.

PE

copake_ham · Feb 1, 2007

Bob F. said:
Doom & Gloom Forum material methinks.

There is nothng in that report that is new re' Kodak's intentions for its film unit. "If it does not make a profit, we will do something about it" is hardly earth shattering information. What company would continue to support a loss making unit for long?

This silliness is getting really, really boring.

Moderators: do your duty!

Bob.

I agree with Bob.

This thread should be transported over to the D & G forum!

Now, where is that ignore button?

Soeren · Feb 1, 2007

Yes, Maybe the film division will do better without Kodak
Cheers
Søren

Sirius Glass · Feb 1, 2007

Soeren said:
Yes, Maybe the film division will do better without Kodak
Cheers
Søren

Many large companies that are in trouble sell their cash cows so that they can report a good quarter for the Wall Street. It also gives them money to pour into the failing divisions!

Steve

aldevo · Feb 1, 2007

Soeren said:
there is mentioned a 15% drop in sales of film. Why is that?. How is Ilford doing in comparison? If The Kodak CEO talks bad about film, which he did, how can he expect people to keep supporting kodak? I mean why start using kodak films if they are to be discontinued in a couple of months? I think thats the reason why its 15% and not only 5%. When you look at the prizes Ilford films are cheaper than Kodak so................. :rolleyes:
Cheers
Søren

Actually, the 15% decrease is lower than was expected. They expected a higher year-over-year drop and the demise of Agfa's and Konica-Minolta film operations probably helped EK.

You cannot make comparisons to Kodak and Ilford. Ilford does not really produced color products (well, apart from a C-41 B&W film). And I suspect (but do not know) that B&W may be holding up better than C-41. No doubt it's holding up better than E-6.

I doubt we'll see Kodak film discontinued in a few months.

jd callow · Feb 1, 2007

gr82bart said:
I concur George. There are some posters who are just so predictable.

Not to mention the ones that think they can run a multi-national better than everyone else. Makes you wonder what they're doing in the middle of the dessert trying to fix their beat up old camera on a dime. Spare us the ego.

Regards, Art.

This may be true of some, but as consumers of a product many here have very relevant observations.

I love Kodak product, but I don't believe Perez has the skills to communicate Kodak's vision properly. If he knows that Kodak will be out of the film business at some point than he should nurture that portion of the business for the betterment of his stockholders / Kodaks share price. He seems to be doing a good job at alienating his film customer whilst he simultaneously makes the film market and Kodak's film business look unattractive to potential suitors.

Photo Engineer · Feb 1, 2007

The drop has been higher than the 15% reported above. It is fluctuating, but at the current rate of decline it is 4x the value predicted by all models constructed by all manufacturers.

This is why it hit Agfa and Ilford and Forte so hard. No one can predict what is going on.

PE

aldevo · Feb 1, 2007

Photo Engineer said:
At the present time the film (B&W and color) and color paper units are making a healthy profit for Kodak. There is even some R&D going on, believe it or not.

PE

Well, they made a $98 million operating profit on $1.36 billion for film, paper, and chemicals. That margin isn't as good as in years past, and they cited raw material costs as the factor.

Kodak probably does as good a job as anybody in the industry in terms of mitigating the effects of rising raw material costs (e.g. recycling unused silver as scrap), so I'm a little concerned what that might mean for smaller players.

This isn't so simple as just raising your prices to compensate for the cost. You can announce a price increase any old time you want, but you won't see any incremental revenue until distributors re-order your products at the increased price.

On the plus side, film sales only declined 15% year-over-year, while they had been declining between 20-30% year-over-year every quarter for the past several years. I'd like to think that we are beginning to see a slowing of the decline in film sales - but then the discontinuation of film and paper operations from Agfa and Konica Minolta probably played a role.

I'd certainly be interested in finding out where the declines are greatest (E-6 > C-41 > B&W, I would expect) but I know of no reliable source for that information.

Photo Engineer · Feb 1, 2007

I've already posted the distribution of the declines so many times, I leave it to you to look it up!

BTW, the decline is an exponential curve, and we are getting onto the toe of the curve as it asymptotically approaches the theoretical zero point.

PE

Earl Dunbar · Feb 1, 2007

Soeren said:
Yes, Maybe the film division will do better without Kodak
Cheers
Søren

Easy to say, I think it would be a far rougher transition than most think.

aldevo said:
Kodak probably does as good a job as anybody in the industry in terms of mitigating the effects of rising raw material costs (e.g. recycling unused silver as scrap), so I'm a little concerned what that might mean for smaller players.

Exactly.

Photo Engineer said:
BTW, the decline is an exponential curve, and we are getting onto the toe of the curve as it asymptotically approaches the theoretical zero point.

PE

Time for even more drinks, Ron.

Photo Engineer · Feb 1, 2007

Earl Dunbar said:
Easy to say, I think it would be a far rougher transition than most think.

Exactly.

Time for even more drinks, Ron.

Earl, lets go out and have one on me.

Regards.

Ron

Kodak hints at sale of film unit...

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