View Full Version : Kodak dropped from Dow
Kodak's lack of direction and management continues to amaze. And not just us. Now they have been dropped from the Dow Jones Industrial Average, where it has been a Dow component since 1930:
George Eastman must surely be spinning in his grave. I'm ashamed for Carp.
Ilford, Fuji, Afga, etc. are not in the Dow, nor have they ever been. Should we be less impressed with them? The Dow is mearly an investment mechanism created by Charles Dow (late 1800's) as a means to provide liquidity in a fairly non-liquid market (at the time). Don't know what originially motivated George Eastman, but he might not have given a rip about this.
Ilford, Fuji and Agfa are not american founded and managed companies. While inclusion in the DJIA does not guarantee a succesful company, it is a measure of prestige, stability and an indication of a probable good investment. If I had the money I would buy Verizon, and short sell Kodak.
My wife is a co-owner of a small financial firm, and after a few drinks we get into some pretty interesting discussions as to the role and value of the stock market in current financial times. Seems like a lot people equate the stock market performance to the economy. Problem is, a company like Amazon who has barely made a dime of profit in it's existence has had stock performance that exceeds a company like Boeing, who is the top exporter in the US and has profits in the $100's of millions. Expectation is the name of the game, so what is it that we expect out of Kodak? From what I can tell in this forum, if they still made Azo (in mass), SuperXX (or whatever the old standard film was), dye-sublimation materials, etc. and sold them at reasonable prices no one would care if they existed on the Dow or Nasdaq, or whatever. If everybody bought a bunch of Kodak stock, then the preception would be that the company was doing well, and then the anxiety to change the company's focus (e.g. dump analog products) might go away. Or is it that Kodak believes that digital (they are very near the top in digital investment, if not at the top) is superior to analog and they feel we should move toward digital anyhow? And to close this obtuse diatribe, why does Budweiser advertise their product during the Holidays (aka Christmas) using a horse-driven sleigh (and most likely the sleigh driver has a buggy whip) instead of the latest SUV? Nostalgia? The desire for more simple times? Who knows, and probably, who cares...
It is interesting isn't it. All the complaints we hear on these forums about Kodak, dropped products and so on. If they had stuck with products that weren't profitable they most likely would have a much lower stock price. On the flip side if they had spent tons of money over the last few years hyping some sort of whiz bang vaporware product with release date that keeps getting pushed out farther and farther the company might have a stock price that was climbing steadily. Never mind the lack of profits or the huge debt amassed in that promotion, the stock price would be high. The whole dot.com stock fiasco of the late 90's proved that stock price has nothing to do with sound businesses.
The Dow is doing nothing more than confirming that the general concensus is that Kodak has not successfully convinced the financial markets that they have a clue to their future. As Paul said, it is all in the general perception of investor confidence in the form of a flow of money (or the lack thereof). Make no mistake about it, there is considerable value in being in the Dow mix (ie. Dow based mutual funds) and this will be very painfull for Kodak. However, it does not have to be fatal if the investors get the message and avail themselves of the source of the condition - management.
Am I concerned about Kodak products in the future? Absolutely not. With great film from Efke or Ilford and some time and materials affording me the capability to mix my own chemistry in the highly unlikely event that they fold their tent it would not necessarily be fatal for the future of large format image making.
Only fools invest in a Dow index. The long-term risk-adjusted return of the Dow Jones is close to zero, and in some years negative. Where is the prestige in that?
Only fools invest in a Dow index. The long-term risk-adjusted (for volatility and cost of carry) return of the Dow Jones is close to zero, and in some years negative. Where is the prestige in that? One is hardly paid enough to hold on to such an index.
Who said that you had to be intelligent to invest in equities?
Maybe when they get rid of Kodak, AT&T and International Paper the performance of the Dow composite will be more than something to joke about. In any event, I let my hedge fund manager make these decisions on my behalf and he knows how to take advantage of weaknesses as well as strengths in the market.
Dow Index covers 30 members, no more. When market trends change, so does the Dow. If you want to recognize that you need to make room for it. Someone had to drop out. Most shareholders have not been happy with Kodak's market performance so for some this is yet another blow. As usual, stock market blows things out of proportion and it may take time for Kodak to gain some ground. I'm only a partial fan of Kodak's products, but will continue to enjoy what I do like while I can. I'd prefer to focus on photography and give support to all of those who make it possible by purchasing their products. The fact that Dow "gurus" dropped Kodak has for me no effect on Kodak's image.
Is this still a photography forum?
I think some (Bill, in particular) may be missing the point. The thread is not about the wisdom of making any particular stock investment. The thread is about the health of Kodak and how that can impact on photographers. Being removed from the Dow can be an indication of company performance and how investors perceive that performance and that, ultimately, can have an impact on the availability of products that we use. I think that is the point not whether someone should or should not invest in Dow stocks, index funds, etc.
In the not to recent past I made predictions of Kodak's removal from the Dow and ultimate bankruptcy. As half has come true, I stand firm on the rest of the prediction. This was made shortly after they droped their own line of MF digital backs. Imagine, we're just a few short years into the digital revolution and Kodak has already retrenched in digital. They're a paper and chemistry company with a culture built around cash-cow products with life spans measured in decades. They will be unable to adjust the corporate culture and learn about tight margins and products that last only about 18 months before becoming obsolete. They're obese and don't comprehend what needs to be done to run in the marathon they've found themselves in. their competion are lean, high tech companies that have been hardened by years of tight margins and worthy competitors.
They couldn't even make their own cameras. They had to buy Chinon to make P&Ss. Their SLR is only assembled by them (body and chip made by other companies).
George, "YOURS" on the second half of the prediction. Being part of an index does not necessarily imply solvency, nor does being thrown out of it imply impending Ch. 11. It is merely perception ruthlessly marketed by fund managers in order to make people believe that there is less risk in an index or in its individual components than those not in it. Educated traders know this to be false - especially post dot.com fiasco. Volatility is everywhere, in blue chip or not. People perceived Enron to be a great buy, almots blue chip even. Not even at zero! Believing that any index is representative of the market is naive. Being dropped from an index is a wake up call for sure. And just like Apple in the late 80s early 90s I believe Big Yellow will bounce back. I will take those warrants at 1 cent please!!
Hedge fund managers (most of them anyway) are only really good at TWO things: taking their management fees and cooking the books.
Friendly correction re: "using a horse-driven sleigh" It's horse-drawn.
Sorry, but that's the only valuable contribution I can make to this thread. I don't know my Dow from an Enron in the ground. I thought Dow was a chemical company and Nasdaq a town near Damascus.
George Eastman's biography says that his suicide note read, "Why wait?". Ironic. That's the same phrase used by EK executives over the years when deciding to discontinue certain products.
End of humorous interjection. Please continue with the Eastman spinners.
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