The end for Kodak?

[Hatchetman]

The Tribune Company declared bankruptcy three years ago and I'm still getting my newspaper, so I wouldn't get too excited.

 

[Aristophanes]

From their last reported Q (3/2011).

ROCHESTER, N.Y., Nov. 3 – Eastman Kodak Company (NYSE:EK) today reported steady
progress toward becoming a profitable and sustainable digital company as third-quarter digital
earnings improved, excluding non-recurring patent licensing revenue in the prior-year period, and
sales increased in its core digital growth businesses. Total company revenue declined largely
because of lower sales of traditional products, a planned reduction in digital camera sales, and the
absence, compared to the year-ago period, of significant non-recurring patent licensing revenue.
Third-quarter sales were $1.462 billion, a 17% decrease from the year-ago quarter or only 5%
when excluding the benefit of a $210 million non-recurring patent licensing transaction in the yearago
period. Third-quarter digital revenue grew 3% excluding that year-ago intellectual property
revenue and a 25% decline in the company’s Digital Cameras & Devices business, which reflects
the strategic decision this year to trade revenue for improved earnings. Revenue from the core
digital growth businesses – Consumer and Commercial Inkjet, Workflow Software & Services, and
Packaging Solutions – increased 13%, fueled by 44% revenue growth in Consumer Inkjet printers
and ink, and 89% revenue growth in Packaging Solutions. The revenue decline rate for the
company’s Film, Photofinishing and Entertainment Group slowed to 10% in the third quarter.

What's killing Kodak revenues is film, both photo and motion picture. Their overhead to carry this product line as it declines in gross revenues is eating into the capital of the company, and digital services of all types are not growing fast enough to cover those losses. Even if the actual film per roll or issue registers a tiny profit, it's nowhere near enough to make up for their realized losses. It's kind of like switching to a more economic 4-cylinder car from an 8-cylinder truck to save gas, but you're still forced to pull a 20 ft. trailer up a hill.

Pensions and medical costs are also a huge drag, stated in their annual filings. The outcome scenarios here are brutal and sad.

Kodak is about 75% down from its historic high point, almost all that loss attributed to consumers voting with their $$$ away from film. While I question some of the strategic vision of the digital side (Kodak had all the tools and patents to become a major sensor supplier starting in the early 1990's) it's hard to see how any management could have stopped the total collapse of films sales and the accompanying revenue.

I look at a very large # of corporate websites for statements as part of my work and I have to say, the Kodak one is excellent. In fact, for its organization and clarity it's the best I've ever viewed:

http://investor.kodak.com/phoenix.zhtml?c=115911&p=irol-newsEarnings

 

[bwfans]

The best case for film shooters is, Kodak will split into a few smaller companies. One of them will be following the direction of Ilford. This way we will still have Tri-X, TMax, Ektar, E100G, XTOL, HC110 for a long while.

 

[werra]

So doesn't it all look very similar to AGFA story?

 

[MDR]

Werra the tiny difference is that Agfa never went Bankcrupt only their Spin off Agfaphoto (courts did investigate this one). I hope Kodak doesn't end up like Polaroid.

 

[Hatchetman]

From their last reported Q (3/2011).
What's killing Kodak revenues is film, both photo and motion picture. [/url]

I do not understand. Nine months ending Sept 2011, film division has operating profit of $2MM compared to digital imaging division loss of $350MM. See Page 26 10-Q document.


Nine Months Ended
September 30,
(in millions) 2011 2010
(Loss) earnings from continuing operations before interest expense, other income (charges), net and income taxes:
Consumer Digital Imaging Group $ (350) $ 345
Graphic Communications Group (171) (92)
Film, Photofinishing and Entertainment Group 2 86
Total of reportable segments (520) 337

 

[Aristophanes]

So doesn't it all look very similar to AGFA story?

We should hope not.

AGFA Film, the spin-off from the parent, died due in retrospect to the collapse of film demand. It survives on only as a label.

All of Kodak's official statements indicate they cannot predict a bottom in demand for film. That could make it very difficult to sell the film component.

 

[analog what is that?]

Yes similar to AGFA, and this might mean we get new manufactured film LONGER, since this opens up a venue for smaller, hungrier and fqaster companies, with less history and obligations.....
It might mean chinese manufacturers are finally able to find a market for developing better films and keep them in production for a longer time, than if they had to continue competing with Kodak, both going bust in the process.

Kodak sat on digital technology for 20 years, while miliking us with their near-monbopoly in the film finishing business.....

 

[keithwms]

Just from a pure business perspective, I don't see a lot of things to attract investment to EK. Yes, they have some tantalizing IP, but things move very rapidly in the sectors in which they operate, and current IP isn't worth squat unless you can defend it and constantly refresh it. Best case, they'll split up into smaller, better focused companies and, after some further devaluation, somebody will snatch up the sweet little bargain that is their film sector and stable of respected brands.

EK should go visit their Senators and make a play for large military contracts, emphasizing the importance of immediate job growth. They need that kind of investment to stay afloat, it isn't going to come from the private sector at this moment. We uregntly need real manufacturing jobs and companies like EK are far more attractive investments than some of the fly by night operations that have recently been funneled stimulus money.

 

[railwayman3]

We should hope not.

AGFA Film, the spin-off from the parent, died due in retrospect to the collapse of film demand. It survives on only as a label.

True, the Agfa Film spin-off (Lupus Imaging?) now seems just to use the brand for own-label film made by Fuji (and, latterly, color negative "Made in China"...perhaps by Lucky Film?). So not an alternative independent source of film at this stage. (The other part of Agfa, in Belgium, still coats film, but, not, I believe, consumer product).

Ilford/Harman, as a spin-off of the insolvency/re-organisation of the "old" Ilford, seems to have found its niche as a quality manufacturer and supplier of a more-or-less fixed range of "known and trusted" product for the specialist market. (And avoiding anty reliance on the declining demand for movie stock...)

So the best hope is that the film part of Kodak might go the Ilford/Harman way of a private buy-out?

Fuji seems an unknown quantity...they have certainly cut their film range, but are very poor at providing accurate information, even on what is actually available in any particular area. They will presumably also be affected by declining movie demand, but they give the impression of being a much more solid company with their other interests in various fields.

 

[vpwphoto]

Kodak sat on digital technology for 20 years, while miliking us with their near-monbopoly in the film finishing business.....

I DO NOT BUY THIS ONE INSTANT!!. I made the transition from Film to Digital in the professional arena.
I used one of Kodak's first digital cameras... the files couldn't be used for much!!!
The current computer technology made editing even a scanned HRes images a LONG process.
I remember a clipping path taking 5 minutes to render on a decent computer, and an Unsharp mask took 3 minutes to Run.

We were not ready for anything they "sat" on.

I then used a $30,000 DICOMED digital back that had a $55,000 computer tethered to it to run. It made real nice images digital images (the latitude before highlights "bloomed" was that of slide film), that took a while to render also.

 

[CGW]

Yes similar to AGFA, and this might mean we get new manufactured film LONGER, since this opens up a venue for smaller, hungrier and fqaster companies, with less history and obligations.....
It might mean chinese manufacturers are finally able to find a market for developing better films and keep them in production for a longer time, than if they had to continue competing with Kodak, both going bust in the process.

Kodak sat on digital technology for 20 years, while miliking us with their near-monbopoly in the film finishing business.....

It might mean chinese manufacturers are finally able to find a market for developing better films and keep them in production for a longer time, than if they had to continue competing with Kodak, both going bust in the process.


The fact of insufficient demand remains. While Kodak reps were crowing about increased sales as late as November, they were silent about volume.

 

[MDR]

Lupus didn't die because they didn't sell any film but because their former parent blocked Lupus' access to its accounts and money and because of a slightly criminal Boss. The only thing in common with Kodak is the amoral CEO.

Btw Fuji grows stronger and stronger in Tinseltown until a few years ago very few movies were shot on Fuji Stock (which is often superior to Kodak stock) but numbers a rapidly climbing furthermore a lot of film are shot on Kodak but released on Fuji or Agfa Stock (both Cheaper and just as good) and as we all know the money is in the release stock. Fuji also has new motion picture stocks (Eterna Vivid series) that still look like film (grain) as opposed to Kodak's drive for grainlessness.

 

[railwayman3]

Lupus didn't die because they didn't sell any film but because their former parent blocked Lupus' access to its accounts and money and because of a slightly criminal Boss. The only thing in common with Kodak is the amoral CEO.

Isn't Lupus Imaging the current business using (among others) the Agfa brand name for consumer goods? (See Dead Link Removed )

Wasn't there a previous unsuccessful re-incarnation of the AgfaPhoto brand after the "old" Agfa closed...in which case you might be libelling the wrong CEO?

 

[Richard S. (rich815)]

Film, especially B&W, will survive. But not Kodak. And I doubt anyone will buy their film division. If you like Kodak film load up the freezers or learn to love other competitor's emulsions. We still likely have another 6 months or so of their film in the distribution channel.

Maybe we'll be lucky like it was for APX for a few years with seemingly loads around for a while (ha! I remember all that APX having 2009 and 2011 expirations and thinking how long still that was!) Now try to find expired APX25 for less than $10 a roll or APX100 for not much cheaper.

 

[Aristophanes]

somebody will snatch up the sweet little bargain that is their film sector and stable of respected brands.

Their film divisions has lost money Q over Q at about 10% per.

It's a steep decline of demand with no bottom in sight.

Who buys a product with a declining customer base? Where are the new cameras in which to put new film? Where are the new customers to get that return on investment?

There is a very real threat that Kodak's entire film production operation is shut down. If their creditor in place financing does not go through, the film division could be starved for operational capital.

The film division is not a bleeding asset in the eyes of the creditors. The freefall in demand for film will, soon, not cover the expenses to make the product.

 

[bwfans]

Prediction is not hard if not cheap. Here will be mine based on the market observation:

Ilford will live for a long time based solely on their b&w materials.

Between Fuji and Kodak, one will stay and one will be gone or leave the market of analog photographic materials. The one staying will be based on color material productions, also some b&w and chemicals.

The only future for Kodak is it will spin off a smaller but solid film company, with a different management who is enthusiastic about the analog photography. Otherwise I will predict it will go the road of Polaroid, with a brand name of Kodak and under this umbrella people selling all kinds of cheap electronics plus $5 sun glasses.

Fuji is diversifying its production between film, digital, and pharmaceuticals. I wish their success and leave us some unique products like Velvia, Acros, color papers, etc.

 

[MDR]

Railwayman you are of course right I meant the first spin off of Agfa after Bayer left the film business Agfaphoto which became a criminal case unfortunately for Agfaphoto their former parent had better lawyers.

Dominik

 

[Bob Carnie]

I agree,

A solid smaller company with dedicated ownership able to use the equipment of choice would be a good thing. Having coating alleys in North America working with different emulsions is too much to hope for.

Prediction is not hard if not cheap. Here will be mine based on the market observation:

Ilford will live for a long time based solely on their b&w materials.

Between Fuji and Kodak, one will stay and one will be gone or leave the market of analog photographic materials. The one staying will be based on color material productions, also some b&w and chemicals.

The only future for Kodak is it will spin off a smaller but solid film company, with a different management who is enthusiastic about the analog photography. Otherwise I will predict it will go the road of Polaroid, with a brand name of Kodak and under this umbrella people selling all kinds of cheap electronics plus $5 sun glasses.

Fuji is diversifying its production between film, digital, and pharmaceuticals. I wish their success and leave us some unique products like Velvia, Acros, color papers, etc.

 

[Aristophanes]

A solid smaller company with dedicated ownership able to use the equipment of choice would be a good thing. Having coating alleys in North America working with different emulsions is too much to hope for.

But who will put forth the money for a company making products for a shrinking consumer base?

Without new cameras as part of the formula, the consumer base for film emulsions of any kind from any company, Ilford included, will continue to shrink, not grow, and not even stabilize.

 

[Mustafa Umut Sarac]

Some investors rented the Polaroid factory to coat flexible solar panels. May be Kodak Film Coating machinery have other uses.

 

[Bob Carnie]

sorry I am speaking of paper materials and some niche film products.

Before the advent of Digital has clouded the scene, there are hundreds of millions of negatives still to be printed.
People are converting digital files to negative with in great numbers.

MAS is coating paper in Europe, I am not sure how many runs he has done so far and Mirko in Europe has been able to coat the Agfa Classic formula.

Maybe Adobe will step up and buy a few coating alleys, most of us printers are using their software, maybe a natural progression for them.

But who will put forth the money for a company making products for a shrinking consumer base?

Without new cameras as part of the formula, the consumer base for film emulsions of any kind from any company, Ilford included, will continue to shrink, not grow, and not even stabilize.

 

[PKM-25]

From their last reported Q (3/2011).I look at a very large # of corporate websites for statements as part of my work and I have to say, the Kodak one is excellent.

Ahh, it is all beginning to make sense now, you are mistakenly logged into APUG when you should be logged into CPUG ( Capitalist Pundit User Group )...

Can you give it a rest for a bit and do your self a favor...well, us a favor and just wait and see what happens...and buy some film and use it, if you really do photography at all?

By the way everyone: This forum is one of *THE* worst in terms of all talk and no action, little brilliant imagery, etc. Think about that, really....

 

[pbromaghin]

But who will put forth the money for a company making products for a shrinking consumer base?

People with imagination and vision. People who believe they know where the bottom is and have a plan to operate profitably at those volumes. It will require that these people acquire the machinery at scrap prices and product rights for practically nothing. It must be an asset-only purchase including no liability for retirees (sorry, PE). Oh, and they must be able to keep the people with the large brains, the chemists and engineers with all the specialized knowledge.

Without new cameras as part of the formula, the consumer base for film emulsions of any kind from any company, Ilford included, will continue to shrink, not grow, and not even stabilize.

At the bottom end, how difficult can it be to build a 21st century version of an Instamatic or Hawkeye? How difficult can it be to partner with an existing manufacturer to produce a film version of an existing dslr by taking out 90% of the circuitry, adding film handling hardware and slapping on a Kodak label? I doubt those companies have forgotten how to build a film body. If they dust off an old design, startup costs would be very low, mainly for tooling up the manufacturing.

Producing products for a niche market is very possible, especially if that niche is actually world-wide via sophisticated web marketing.

 

[MaximusM3]

Ahh, it is all beginning to make sense now, you are mistakenly logged into APUG when you should be logged into CPUG ( Capitalist Pundit User Group ).

I work in photography as all of my work, read, shoot for a living, with film and have *direct* contact with people at Kodak, Ilford, labs, etc. In short, you don't have a clue...

You keep on and on and on about no new cameras being made and have no clue that there are a couple of people who are about to start "tuning up" those billions of film cameras to sell as new as they can be. And you talk about hobby shooters but make no mention of the many pros who have either gone back to film for part of their offerings or at least use it in casual form for personal projects...lots of them.

So do your self a favor...well, us a favor and just wait and see what happens...and buy some film and use it, if you really do photography at all.

By the way everyone: This forum is one of *THE* worst in terms of all talk and no action, little brilliant imagery, etc. Think about that, really....

And isn't it always this way? Negativity and negative attitudes are the life and blood of news, forums and controversy. Me, I just bought another 200 rolls of Tri-X 120 and shoot an average of two per day. Happy days!