Kodak Financial Woes Deepen: Film Future?

Barry - that is something symptomatic of why so many publicly-traded companies are
failing nowadays. They can't just reach equilibrium and make profit like a sensible
private company does (like the corporation I work for). They have to fluff their fur and
look bigger and bigger to attract stock market attention, even if it is potentially counterproductive. Get their feet into way too many things at once. Run on a bluff
and hope it pans out before bankruptcy pans out. There is money to be made on film,
but color film in particular does need the support of heavy R&D backing. If either Kodak
or Fuji buckle, their role will be hard to replace.

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Originally Posted by Brian Ellis

Frankly the statement in the Japanexposures website is stupid not to mention wrong. It's easy to make technically poor photographs with a digital camera. They still have to be focused properly, they still have to be used at an appropriate shutter speed, depth of field remains a concern, dynamic range remains a concern, noise is a concern, I could go on and on but believe me, there are plenty of things that can wrong from a technical standpoint with a digital camera. If you doubt me just go to any beginner's-type forum in which the participants use digital cameras and look at the images.

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What you see with the beginners is that they have switched off the targeting computer, and they aren't using the Force. (link, link) Plus, that UI design looks like there should be a piece of cheese there, too! (link) "Reactor exhaust port ... no, a piece of cheese ... Reactor exhaust port ... a rat? ..."

If there is enough computational assistance when making a photograph, then of course, from a technical standpoint, the photograph can't be screwed up. The camera will of course focus on something, and it will make an exposure.

But back to hypothesizing about a film future where we're all wiped out by a gargantuan asteroid carrying people eating bacteria and nanobots from an alien civilization ...

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Originally Posted by falth j

Until, and only when American consumers moan enough about their lost jobs, loss of decent wages, working at two, three or more crap jobs, will they realize what the heck they did by buying foreign goods with fuzzy quality...

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I recently went to the hardware store, and took a look at Vice Grips pliers. These used to be made in the USA, but now they are being made in China. Was that my fault? I don't think so. I don't think that any consumer of Vice Grips pliers made the decision that the product should be manufactured in China. I had been looking forward to puchasing a product made in the USA. But somebody else made that decision, not me, and certaintly not the workers at the Vice Grips plant. Is the Chinese quality below the American quality? No, but I'd still rather buy the US-made product. But I can't do that.

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Originally Posted by goamules

There are a ton of "buggy whip manufacturer" historical business analogies that confirm what Engl said about most people not wanting film anymore. Look at the American pocketwatch manufacturers from the 1870-1930 period. Waltham, Elgin, etc. made extremely precise timekeepers. A standard Waltham took 8-12 months to produce, and they made thousands. Everyone carried one. Something changed, and they all went out of business.

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You mean, like, World War I? Yes, that shook things up quite a bit. The soldiers found the practicality of a timepiece worn on the wrist instead of inside a pocket. The Anglo-Boer War was also influential. Various materials improved the combat durability of the mechanism, and Rolex advanced precision timekeeping. Now pocketwatches have essentially returned, in the guise of the iPhone. There are many people who no longer wear watches because they carry a cell phone. And the iPhone now has a 5Mp camera which records HD video, and the iPad can give a large format experience.

Yes, digital technology continues to change how we communicate. Of course film is a hassle, because its information has to become digitized. Consider for a moment if I first wrote out my missive in longhand, using quill and paper. Then I'd have to flop it on the scanner, correct errors in the text recognition software, and finally upload it. Much easier to type it in to begin with, eh?

I recently had to "sign" some documents with a fake digital signature. (Docusign.net) I could pick from a list of different handwriting styles, but I couldn't upload my own real signature. That's similar to the difference of writing something longhand with quill and paper, vs word processor and printing out the document with a HP Quill-O-Matic.

So what's in Kodak's future? I have no idea. Perhaps they will wind up owning the entire color film market because Japan will sink into the sea. Or maybe Japan will be stomped flat by Godzilla, Kodak will be dead from corporate raiders, and Ilford will be gone because Chernobyl flared up and Iceland erupted so it'll be burried under radioactive ash.

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Originally Posted by Brian C. Miller

...Of course film is a hassle, because its information has to become digitized...

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Why does it have to be digitized? None of my negatives (or prints for that matter) have ever been scanned and I can think of no reason why they ever will.

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Originally Posted by Sal Santamaura

Why does it have to be digitized? None of my negatives (or prints for that matter) have ever been scanned and I can think of no reason why they ever will.

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You don't have to digitize it. But the vast majority of people do: Their purpose is to display their work via the Internet, or on their personal photo viewing device (iPhone).

Technology does not determine what people want to do, it enables it. People have always wanted to be able to show their friends their photos. Even before iPhones, you could buy wallets with a plastic insert to hold photos, so that people could show other people pictures of their families or their sailboats or their pickup truck or their last vacation. How many carry a wallet with photos in it now?

The iPhone merely enabled what many have always wanted to do. They wanted to do it before the smart phone made it possible. They wanted to do it even before Dick Tracy provided them a fictional visualization of it. Had they not wanted to do it, Dick Tracy would not have been the good guy, and his use of the gadgetry would not have attracted a popular audience.

If you oppose technology, then you must oppose the things that people want to do. Technology that does not enable what people want to do dies a quick death in the market, unless it is forced on us by law (an example of that might be a requirement that tax returns be submitted via the Internet). And forcing the use of technology by law is pretty much in the same category as forcing anything else by law--the lawmakers should be required to show a compelling reason for the requirement.

On the subject of corporations: Corporate leaders are required to represent the best interests of the stockholders. And the documentation requirements for this are stronger than ever for publicly held corporations, with the passage of Sarbanes-Oxley after the Enron bust. CEOs can now be held personally liable and so they will be unwilling to approve any money-losing plan, even as part of a money-making strategy, without documented board approval of the plan. Even CEOs of private corporations are subject to legal action by stockholders (of course, their exposure is inversely proportional to the percentage of stock they control). The American people have demanded these protections, partly as a response to highly public fiascoes like Enron. Few who represent the welfare of small private investors would argue against these requirements much.

Along with that, mutual fund managers have to show the ability to better the return of the broader market reliably (which very few do), and so they only want to make big investments in companies that show very strong growth. This is also demanded by small investors, who don't want to face short-term risk in their investments. The company where I worked was told they needed an annual growth in revenue of 25% to become widely bought by such institutional and fund-manager investors. We were in a mature market, and such growth was hopelessly unreasonable. We should never have gone public.

Increasingly independent boards often lack industry (vis a vis "management") expertise and demand less risk and more profit on a quarterly basis for stockholders. The quarterly focus has caused more problem for American corporations than anything. Corporations seek stock-value appreciation rather than paying dividends, though, because the former is a capital gain and the latter is income and is taxed at a higher rate. If the tax laws were balanced between income-production and capital gain, companies would be more profit-driven and less growth-driven, and it would again be possible for public corporations to focus on mature products that are profitable, even in a declining market.

Rick "corporations and markets are not evil, just stupid, while the alternatives are usually both evil and stupid" Denney

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Originally Posted by rdenney

On the subject of corporations: Corporate leaders are required to represent the best interests of the stockholders.

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In fact they are not, there merely is a fashion to do so, and some corresponding legislation has been lobbied for by banks and fonds. But the notion that corporate leaders should put the interest of their creditors before that of the staff or customers is far from natural and inevitable.

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Consider for a moment if I first wrote out my missive in longhand, using quill and paper. Then I'd have to flop it on the scanner, correct errors in the text recognition software, and finally upload it. Much easier to type it in to begin with, eh?

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A friend of mine's father used a the more modern dip pen to write some very long books. I'm sure who ever had to set the proof type wished he had at least used a typewriter.

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Originally Posted by Brian C. Miller

...Of course film is a hassle, because its information has to become digitized...

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Originally Posted by Sal Santamaura

Why does it have to be digitized? None of my negatives (or prints for that matter) have ever been scanned and I can think of no reason why they ever will.

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Originally Posted by rdenney

You don't have to digitize it. But the vast majority of people do: Their purpose is to display their work via the Internet, or on their personal photo viewing device...

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"Can" and "want" are fine concepts, but I was merely reacting to Brian's contention that film has to become digitized by pointing out that it doesn't have to be. :)

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Originally Posted by rdenney

...How many carry a wallet with photos in it now?...

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I can't answer your question, but we can start the count at 1 -- me. :)

Everyone carries a photo in the wallet, or at least they're supposed to - it's called ID.

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Originally Posted by Sevo

In fact they are not, there merely is a fashion to do so, and some corresponding legislation has been lobbied for by banks and fonds. But the notion that corporate leaders should put the interest of their creditors before that of the staff or customers is far from natural and inevitable.

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You are right, but I wasn't specific enough. The board of directors is required to represent the interests of the stock holders. The CEO is required to represent the interests of the business, which which is affected by the staff, product, customers, and board. Of course, the CEO serves at the board's pleasure.

Rick "corporate officer in a former life" Denney

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Originally Posted by Sal Santamaura

Why does it have to be digitized? None of my negatives (or prints for that matter) have ever been scanned and I can think of no reason why they ever will.

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If the information is to be shared through a digital medium, it must be digitized. Any sort of digitization counts: scanning, photographing with a digital camera, or whatever else results in a recognizable digital representation. This includes ASCII art.

Since the current popular medium of sharing information is digital, then of course people will use the most convenient tool to share within that medium. Witness the rise of texting, and the resultant devolvement of the written language.

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Originally Posted by Brian C. Miller

Witness the rise of texting, and the resultant devolvement of the written language.

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You do know they said the same thing about the typewriter, right? :)

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Originally Posted by Ben Syverson

You do know they said the same thing about the typewriter, right? :)

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O tnx 4 dat! dats realy QL 2 knw. i thort txtN wz deth 4 en.
(Lingo2Word)

Lol

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Originally Posted by Ben Syverson

You do know they said the same thing about the typewriter, right? :)

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Indeed, language is always changing. It's just that the people who are most worried about it don't read enough (any?) historical literature to understand that.

Definitely—but while I'm fine with English changing, I certainly don't feel the same way about color film availability!

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Originally Posted by Sal Santamaura

Why does it have to be digitized? None of my negatives (or prints for that matter) have ever been scanned and I can think of no reason why they ever will.

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Originally Posted by Brian C. Miller

If the information is to be shared through a digital medium, it must be digitized...

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But the film-originated images don't have to be shared through a digital medium, therefore they don't have to be digitized.

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Originally Posted by Brian C. Miller

...Since the current popular medium of sharing information is digital, then of course people will use the most convenient tool to share within that medium. Witness the rise of texting, and the resultant devolvement of the written language.

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Your point seems to be that convenience and popularity of a digital medium leads to devolvement. I agree. That's why I'm glad film doesn't have to be digitized. If I want to share my prints, there are a number of mechanisms available. For example, USPS, UPS and FedEx. :)

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Originally Posted by Ben Syverson

Definitely—but while I'm fine with English changing, I certainly don't feel the same way about color film availability!

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Mos def!

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Originally Posted by Sal Santamaura

But the film-originated images don't have to be shared through a digital medium, therefore they don't have to be digitized.

Your point seems to be that convenience and popularity of a digital medium leads to devolvement. I agree. That's why I'm glad film doesn't have to be digitized. If I want to share my prints, there are a number of mechanisms available. For example, USPS, UPS and FedEx. :)

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No, the point is that users in the mass market prefer to display and share photos using digital means. You don't have to be sensitive to that fact in the decisions you make, but the manufacturers whose business model depends on the mass market do. For you it's optional, for them it's not. And Kodak as a manufacturer has always been rooted in creating and responding to the mass market. The whole point of this thread is to ask whether they can and will change to the reality that the mass market displays and shares their photos digitally, so that film can survive as a niche production rather than die as a mass-market production.

Rick "not thinking this thread is about what Sal has to do" Denney

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Originally Posted by rdenney

...The whole point of this thread is to ask whether they [Kodak] can and will change to the reality that the mass market displays and shares their photos digitally, so that film can survive as a niche production rather than die as a mass-market production.

Rick "not thinking this thread is about what Sal has to do" Denney

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It seems that HARMAN, with a smaller plant and more flexibility to meet the demands of various non-photographic coating applications, is doing fine marketing film and gelatin silver paper in its niche market. The mass market has no interest in film, regardless of whether it's from Kodak, Ilford or any other manufacturer. It never again will.

It's very unlikely that Kodak is able or willing to change so that its remaining films can survive as niche market items.

Sal "who only used his practices as an illustration of the type of customer a niche film and paper manufacturer ought to target and never thought this thread was about himself" Santamaura :)

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Originally Posted by Sal Santamaura

It's very unlikely that Kodak is able or willing to change so that its remaining films can survive as niche market items.

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I fear you are correct. It is just not in the American corporate DNA to devolve to a niche market. That's not how those Harvard Biz School graduates keep score.

Rick "wondering if the HBS and its progeny are to blame for the foolishness of corporate America" Denney

I read recently that Kodak is losing money on their inkjet printing, packaging and software units, but the film line is still profitable (although the revenue is falling). So I imagine they will keep film around for a while, since they can't seem to make money on anything else (except maybe lawsuits).

Marco, in one of these threads there's a link to a newspaper article which pretty much states the opposite. If Kodak were in the printing, packaging and software business, they would be the darlings of Wall Street. Kodak's shares have risen based on their lawsuit against RIM and Apple (link), but in Colorado they are demolishing buildings once use for film production (link). "We have two thriving businesses on site, color paper finishing and thermal media manufacturing."

Brian,

You might be right, but I read the info on the Bloomberg Business website, and they should know whether those business lines are profitable or not. The article was about the RIMM suit.

If you're interested in Kodak, this is worth reading:

http://www.postandcourier.com/news/2...odak-on-track/

In 1964, when I was first getting into photography and at the same time was in a junior high civics class, one of our class projects was to learn about the stock market by choosing two company's stocks to follow for a semester as though we were investers. One of mine was Kodak and at the end of the term, it was one of the lowest performers in class with consistent losses.

I didn't keep up with it as a business entity in the intervening years except for the complete fraud of jacking up silver based product prices during the Hunt brothers efforts to corner the silver market. (The fraud part was when a few months later, silver tanked from the mid $50.00 range down to about $5.00 per ounce and yet Kodak made no drop in product prices.) And then there was the enormously expensive debacle with the instant film wars that they lost with Polaroid over copyright infringements.

It feels that over the decades, management has perhaps somewhat consistently pissed away what was once a thriving and honorable company, at least from this person's admittedly limited point of view.

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Originally Posted by Marco Polo

I read recently that Kodak is losing money on their inkjet printing, packaging and software units, but the film line is still profitable (although the revenue is falling). So I imagine they will keep film around for a while, since they can't seem to make money on anything else (except maybe lawsuits).

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Could you give us a link or a cite to what you read? I ask because that isn't exactly what Kodak is saying or what the financial statements show. Kodak's 2010 annual report filed with the SEC shows an operating profit before interest, taxes, etc. from the Film, Photofinishing, and Entertainment Group of $64 million (which unfortunately is a 60% decrease over 2009). But it doesn't show a loss from the Consumer Digital Imaging Group. In fact it shows an operating profit before interest, taxes, etc. of $331 million (an increase of 846% over 2009). So I'm not sure exactly what you're looking at. Of course overall the company continues to produce losses, partly attributable to a goodwill impairment charge from the Film, Photofinishing and Entertainment Group of $646 million in 2010.

Brian,

The business unit that sells film is still making money. The other two units are not yet profitable. The copy below is from the Bloomberg article, which has been updated since I originally read it, but still contains this info:

"The company in January reported 2010 revenue of $7.2 billion, about half the total from 2005, and said two of its three main businesses had losses from continuing operations before interest expense, taxes and other charges.

Perez, CEO since 2005, has said he is using proceeds from intellectual property licensing to invest in the company’s inkjet printing, packaging and software units to blunt falling revenue from camera film."


http://www.bloomberg.com/news/2011-0...apple-rim.html

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Originally Posted by Marco Polo

Brian,

The business unit that sells film is still making money. The other two units are not yet profitable. The copy below is from the Bloomberg article, which has been updated since I originally read it, but still contains this info:

"The company in January reported 2010 revenue of $7.2 billion, about half the total from 2005, and said two of its three main businesses had losses from continuing operations before interest expense, taxes and other charges.

Perez, CEO since 2005, has said he is using proceeds from intellectual property licensing to invest in the company’s inkjet printing, packaging and software units to blunt falling revenue from camera film."


http://www.bloomberg.com/news/2011-0...apple-rim.html

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I don't understand why Perez hasn't been fired. Everything he touches turns to shit. I'm not usually a Kodak basher but I've come to the point where I no longer have any confidence in the company. I realize that companies that are long lived continually need to transform themselves, but Kodak just can't seem to determine what it needs to be or how to get there profitably which brings into scrutiny upper management.

Sadly I think the company is lost.

Don Bryant

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Originally Posted by Marco Polo

Brian,

The business unit that sells film is still making money. The other two units are not yet profitable. The copy below is from the Bloomberg article, which has been updated since I originally read it, but still contains this info:

"The company in January reported 2010 revenue of $7.2 billion, about half the total from 2005, and said two of its three main businesses had losses from continuing operations before interest expense, taxes and other charges.

Perez, CEO since 2005, has said he is using proceeds from intellectual property licensing to invest in the company’s inkjet printing, packaging and software units to blunt falling revenue from camera film."


http://www.bloomberg.com/news/2011-0...apple-rim.html

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I understand that the Kodak business unit that sells film is still producing net revenues before interest, taxes, etc. (which actually doesn't necessarily mean it's "making money" or is profitable since there may be non-operating costs or expenses charged to that unit such as the $610 million goodwill write-off I mentioned in my previous message). As for the Bloomberg article as it relates to the Consumer Digital Imaging Group, I don't know what two businesses the author of the Bloomberg article is talking about since he or she didn't specify them and doesn't provide any numbers. But here are the 2010 net operating revenues before interest, taxes, etc. for Kodak's three operating divisions as shown in Kodak's 2010 annual report filed with the SEC:

"Earnings (Loss) from Continuing Operations Before Interest Expense, Other Income (Charges), Net and Income Taxes by Reportable Segment


For the Year Ended December 31, 2010 (in millions)


Consumer Digital Imaging Group Change
$ 331 +846%
Graphic Communications Group
(26 ) +38
Film, Photofinishing and Entertainment Group
64 -60"

If anyone can find an operating loss before interest, taxes, etc. in those numbers for the Digital Imaging Group more power to them. Of course if you take the "other charges" not included in those numbers into account, such as the $610 million goodwill write-off from the film group that I mentioned in my previous message, then the two businesses that had losses were FPEG and Graphic Communications. Or maybe there were "other charges" to the CDIG that would result in an overall loss for the group, I don't know. But regardless of anything else, it seems clear that whatever the author of the Bloomberg article might have said or meant, the CDIG didn't have an operating loss before interest, taxes, etc. for 2010.

http://www.google.com/hostednews/ap/...536a65f0b52db2

Maybe Kodak is going after bigger fish?

I was curious about what the real earnings from the different Kodak groups were. The info below is from the Kodak website. The fourth quarter seems disappointing to say the least. I think Wall Street is very skeptical that Kodak can be profitable without making so much money on their intellectual property licensing (patents & lawsuits) which obviously won't last forever. Perez may be out as CEO if things don't turnaround by 2012 like he has promised.

• Consumer Digital Imaging Group full-year 2010 sales were $2.739 billion, a 5% increase from the prior year. Full-year earnings from operations for the segment were $330 million, a $295 million increase from the prior year. The year-over-year improvement was driven by intellectual property licensing transactions and improving profitability in Consumer Inkjet, which doubled gross profit dollars from ink during 2010. This was partially offset by declines in Retail Systems Solutions. For the fourth quarter, sales for the segment were $731 million, a decrease from $1.212 billion in the prior-year quarter. Fourth-quarter loss from operations was $57 million, compared with earnings on the same basis of $380 million in the prior-year quarter. These earnings results were primarily driven by a non-recurring intellectual property licensing transaction in the prior-year quarter.

• Graphic Communications Group full-year 2010 sales were $2.681 billion, a 2% decline from the prior year. Full-year loss from operations for the segment was $29 million, a $13 million improvement from the prior-year. The year-over-year earnings improvement was driven by cost improvements in electrophotographic products and lower raw material costs. Fourth- quarter 2010 sales were $757 million, a 3% decline from the fourth quarter of 2009. Fourth-quarter earnings from operations for the segment were $12 million, as compared with $36 million in the year-ago quarter. This earnings decline includes increased investment to support future growth opportunities in Commercial Inkjet and Workflow Software and Services, as well as negative price/mix in digital plates.

• Film, Photofinishing and Entertainment Group full-year 2010 sales were $1.767 billion, a 22% decline from the prior year. Full-year 2010 earnings from operations for the segment were $62 million, compared with $159 million in the prior year. Fourth-quarter sales were $439 million, a 25% decline from the year-ago quarter. Fourth-quarter loss from operations for the segment was $3 million, compared with earnings on the same basis of $53 million in the year-ago period. This decrease in earnings was primarily driven by industry-related declines in volumes and increased raw material costs, partially offset by cost reductions across the segment.

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Originally Posted by Marco Polo

I was curious about what the real earnings from the different Kodak groups were. The info below is from the Kodak website. The fourth quarter seems disappointing to say the least. I think Wall Street is very skeptical that Kodak can be profitable without making so much money on their intellectual property licensing (patents & lawsuits) which obviously won't last forever. Perez may be out as CEO if things don't turnaround by 2012 like he has promised.

• Consumer Digital Imaging Group full-year 2010 sales were $2.739 billion, a 5% increase from the prior year. Full-year earnings from operations for the segment were $330 million, a $295 million increase from the prior year. The year-over-year improvement was driven by intellectual property licensing transactions and improving profitability in Consumer Inkjet, which doubled gross profit dollars from ink during 2010. This was partially offset by declines in Retail Systems Solutions. For the fourth quarter, sales for the segment were $731 million, a decrease from $1.212 billion in the prior-year quarter. Fourth-quarter loss from operations was $57 million, compared with earnings on the same basis of $380 million in the prior-year quarter. These earnings results were primarily driven by a non-recurring intellectual property licensing transaction in the prior-year quarter.

• Graphic Communications Group full-year 2010 sales were $2.681 billion, a 2% decline from the prior year. Full-year loss from operations for the segment was $29 million, a $13 million improvement from the prior-year. The year-over-year earnings improvement was driven by cost improvements in electrophotographic products and lower raw material costs. Fourth- quarter 2010 sales were $757 million, a 3% decline from the fourth quarter of 2009. Fourth-quarter earnings from operations for the segment were $12 million, as compared with $36 million in the year-ago quarter. This earnings decline includes increased investment to support future growth opportunities in Commercial Inkjet and Workflow Software and Services, as well as negative price/mix in digital plates.

• Film, Photofinishing and Entertainment Group full-year 2010 sales were $1.767 billion, a 22% decline from the prior year. Full-year 2010 earnings from operations for the segment were $62 million, compared with $159 million in the prior year. Fourth-quarter sales were $439 million, a 25% decline from the year-ago quarter. Fourth-quarter loss from operations for the segment was $3 million, compared with earnings on the same basis of $53 million in the year-ago period. This decrease in earnings was primarily driven by industry-related declines in volumes and increased raw material costs, partially offset by cost reductions across the segment.

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Where is the packaging division figures?

Bob,

Packaging is part of the Graphic Communications Group.

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Originally Posted by Marco Polo

Bob,

Packaging is part of the Graphic Communications Group.

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"Kodak reaffirms plan to complete transformation by 2012

At its annual investor strategy meeting today, Eastman Kodak Co. executives will detail plans to complete its transformation into a digital company with sustainable profits by 2012.
Kodak said it expects revenue in its core growth businesses – Consumer and Commercial Inkjet printing, Workflow Software and Services, and Packaging Solutions – will more than double in size by the end of 2013. During this time, Kodak will effectively manage its large, cash-producing businesses, and drive toward sustainable, profitable growth on the strength of its unmatched expertise in materials science and digital imaging science, the company said. Consumer Inkjet will achieve positive gross profit dollars during 2011, with full-year positive operational earnings in 2012, and the company’s Commercial Inkjet business will achieve profitability during 2012.
“The success of our core growth businesses demonstrates that our strategy is working,” says Antonio M. Perez, chairman CEO, Kodak. “Over the next three years, we will continue to improve our digital performance, as our core growth businesses begin to achieve profitability this year and turn profitable as a group in 2013. We are also well-positioned in several large and established digital markets, and we are committed to managing those businesses to maximize earnings and cash generation. We have sufficient resources and the financial flexibility necessary to fully implement our strategy and deliver shareholder value.”
For 2011, Kodak is focused on two key financial metrics:
Continue to build the scale of its four digital growth businesses – Consumer and Commercial Inkjet, Workflow Software and Services, and Packaging Solutions – and achieve greater than 40 percent aggregate revenue growth from these businesses.
Achieve positive cash generation before restructuring payments.
On a continuing operations basis, the company is also targeting the following in 2011:
Operational earnings of negative $200 million to breakeven, on total company revenue of between $6.4 billion to $6.7 billion;
2011 GAAP loss from continuing operations in the range of $300 million to $100 million;
A year-end cash balance of $1.5 billion to $1.6 billion, after taking into account all cash actions, including modest debt payments due during 2011.
Kodak’s core digital growth businesses – Consumer and Commercial Inkjet, Workflow Software & Services, and Packaging Solutions – together grew 18 percent during 2010. Between 2011 and 2013, the company expects revenue from these businesses to more than double, with annuity sales, from ink and consumables, growing as a percentage of revenue. In 2013, Kodak expects revenue from these businesses will approach $2.0 billion, with positive earnings.
The company also remains committed to executing its intellectual property strategy, which is focused on achieving three key goals – providing the company with design freedom to develop and introduce innovative, new products; providing Kodak with access to new markets and new partnerships; and continued income and cash generation. From 2008 to 2010, Kodak generated $1.9 billion in revenue from its patent portfolio. Through the planning period, the company expects to generate an average of $250 million to $350 million per year in intellectual property revenue.
Industry-wide demand for digital still cameras is declining, particularly in the point-and-shoot category, while other categories, including pocket video cameras, continue to grow. During 2010, Kodak grew its share of the pocket video camera market by 10 percentage points and today is the number two player. In 2011, Kodak will transform its strategy specific to Digital Capture & Devices by aggressively focusing on the most profitable segments and geographies of this market, trading top-line growth for improved earnings.
Kodak is well-positioned in Retail Systems Solutions and is the market leader with more than 100,000 retail touch-points worldwide. During 2010, Kodak added more than 8,000 new customer touch-points and is enabling direct Facebook connectivity.
The company’s Film, Photofinishing & Entertainment Group (FPEG) has maintained a strong market position in all of its key product categories, and continues to be a cash generator through the planning period. The FPEG portfolio includes Entertainment Imaging products and services, traditional photofinishing, consumer and professional film capture and services, and products for industrial material markets.
For 2011, the company is taking aggressive action to improve the operating results from these businesses. These actions include capitalizing on Kodak’s market-leading position through a continued focus on unsurpassed quality and service and the introduction of innovative, new film products; continuing to aggressively reduce costs in line with industry decline rates; and taking aggressive actions to mitigate silver pricing volatility, including the implementation of an indexed pricing model for key products and a transition to a product portfolio less dependent on silver.
Kodak enters 2011 with sufficient resources and the financial flexibility to fully implement its strategy for profitable growth.
The company’s target business model assumes, on average, a compound annual growth rate for digital revenues of 4 percent from 2011 through 2013, and a total company compound annual revenue growth rate of less than 1 percent during that period.
Kodak’s target model for 2013 includes a total company operational gross profit margin goal of 25 percent to 26 percent. The company’s goal for operational earnings is 6 percent of revenue for the total company.
“Customers are embracing our unique value propositions in new growth markets, our traction is evident, and we are committed to improving earnings and cash performance from our large, established businesses,” says Perez. “Kodak is now a company with a broad portfolio of innovative digital products and services, leading intellectual property, and dedicated employees around the world. I am confident that we will continue to achieve market success, complete our transformation into a sustainable, profitable company, and create significant value for our shareholders.”

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Originally Posted by Bob Salomon - HP Marketing

... drive toward sustainable, profitable growth on the strength of its unmatched expertise in materials science and digital imaging science, the company said.

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They're headed nowhere if they don't invent something good, and soon.

It is one thing to capitalize on small video cam technology if that is booming, but ultimately that is a commodity business -- fine for keeping the payroll going for a while.

But they ultimately need to pull an Apple and do something "insanely great" with the wealth of knowledge they have across these domains above. No other company except Fuji has that. That is what makes them different than other tech/imaging companies... the materials piece.

Whoever creates digital sheet film first will own the market... No reason why it shouldn't be Kodak.

When you go "public" you become a target. When Wallstreet sees the roller coaster ride, regardless of cause, they set about to play their games. At my age I've seen this repeatedly, the company is either destroyed or it retains a name but nothing else and then self destructs. Somehow or other I can see future sales in Kodak gutters and downspouts!

My guess, with 6 decades in the business, and among other things I teach Photo History, that "the street" will take over EK, highly unqualified people will manage, and a series of product curves will be generated. They will decide that dealing with digital is the "in" thing, that some cutesy lower cost products will be emphasized, and then because of the more or less constant reduction of film sales that the "coating alleys" (and they are rather new and very expensive) should be sold and at a fire sale low price. Their mistake, as always, will be based on sales curves rather than market potential with legitimate thoughts towards a fairly "flat" curve of demand. A smart organization will take a look at the surprisingly hard core of film fanaticism and decide that this is good for at least 25 years, if you manage the busines well. Kodak and Fuji dumped very large amounts of research and developent into new films just as digital cameras started to fly high, it was probably not too smart, but some of us liked that just the same. Should the above happen, the break even point for profit would probably much lower than with the Kodak over all heavy weight on it neck, a bit like some of the European companies that always made a profit on smaller sales volume. Looking back a few years, Kodak discontinued b/w photo papers, based on sales curves. The real problem was that Kodak made the worst b/w papers in the industry. Maybe they should have created papers as good as Harman/Ilford and others.

I had over 40 years of professional experience before I started teach pro photography 21 years ago. We have taught 100% digital for over 6 years but I still shoot a small amount of film, especially b/w. I would like to hear what you think.

Lynn

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Originally Posted by Lynn Jones

When you go "public" you become a target. When Wallstreet sees the roller coaster ride, regardless of cause, they set about to play their games.

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Dr. Jones, you've hit my biggest complaint about corporate America. They value too much the financial techniques taught at places like the Harvard Business School, based on the assumption that good management needs no domain expertise. Then, they don't listen to the domain experts, and they do whatever they can to build the quarterly financial statement instead of building shareholder value in the long run. Maybe we need to tax capital gains at a higher rate (yes, for me, that is anathema!), and not tax dividends at the income rate as we do now. Then, companies would focus on paying dividends to stockholders rather than focusing solely on capital appreciation. Stock ownership would be more about income and less about capital gains, and companies would focus more on making their business profitable and less on making them bigger.

I recall Robert Townsend (RIP), author of Up The Organization!, offering to be a tour guide at the Harvard Business School in 25 years. He figured business would have wised up and rejected the notion that management technique supersedes domain expertise. He wrote that 35 years ago, so his wish unfortunately did not come true.

Rick "who has seen this from the inside out" Denney

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Originally Posted by Lynn Jones

... The real problem was that Kodak made the worst b/w papers in the industry...Lynn

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I beg to differ with you; they made some very fine b/w papers. Howard Tanger

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Originally Posted by Lynn Jones

The real problem was that Kodak made the worst b/w papers in the industry.


Lynn

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Wow! Such bloviated palaver. Since your statement falls under opinion I'll have to give you a pass even though factually you are incorrect. Kodak made some wonderful B&W paper, as good as anyone but that's not to say Ilford and many others didn't do the same.

Don Bryant

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Originally Posted by Howard Tanger

I beg to differ with you; they made some very fine b/w papers. Howard Tanger

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Kodak made some really great products when they targeted the pro photo market.
Kodak made some junk when they targeted the mass market.
Kodak made something for everyone.
Now Kodak just seems to make stuff to try to please Wall Street.
I miss they days when they tried to please photographers!
Man I loved Kodak back then! :mad:

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Originally Posted by Allen in Montreal

Kodak made some really great products when they targeted the pro photo market.
Kodak made some junk when they targeted the mass market.
Kodak made something for everyone.
Now Kodak just seems to make stuff to try to please Wall Street.
I miss they days when they tried to please photographers!
Man I loved Kodak back then! :mad:

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Kodak is a company that's trying to survive a seismic shift in the way people do what they made products to do. I have no idea whether they'll be able to survive but I hope they do and I give them credit for trying. So many other companies in their situation just gave up.

To Howeard and DBryant, i'm sorry that you disagree with me, and thats OK too, however when Kodak folded the B/W papers they had the worst VC papers and not much else. If you tested them grade for grade, there were huge differences from standard. Kodak once made wonderful b/w papers, I used them for a very long time but not in the last couple of years.

The other day I was looking at my paper samples from Kodak (and a long time ago, Ansco), there were stunning choices, not only of types but of surface. I'd sure like to see some Ektalures again, especially X,

Lynn

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Originally Posted by John NYC

They're headed nowhere if they don't invent something good, and soon...

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I've followed this thread over the weeks and haven't really made any comments.

But John I think you hit the nail on the head so to speak.

They need an iPod-equivalent innovation.

Bob G.

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Originally Posted by rguinter

They need an iPod-equivalent innovation.

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Right. They need something hip, cool, mass marketable, and somewhat disposable.

They started with cameras and film, dropped the cameras, and now seem to be dropping film. The problem is finding a me-too-killer product. The iPod is a me-too product, but it leap-frogged all of the competition. Sony should have come out with the killer MP3 player, but they didn't. The iPhone is a me-too product, but it was so different, and it was from Apple, that everybody jumped on it.

Anoto produced digital paper and pen. The only advance from that would be the flex display technology, from E Ink. But where is Kodak in that?

The current Kodak film tech is amazing. When I saw what their motion picture film can do, I was amazed. Too bad it isn't available in sheet size. But film no longer has mind-share. Film exists for niche markets, and fortunately one of those markets is the motion picture industry.

So back to hip, cool, mass marketable, and somewhat disposable.

They should just invest in Apple stock and give up making things.

So long as we're to use the Apple Computer analogy-- remember that most everyone counted Apple as down-for-the-count for more than a decade while the WinTel juggernaut grew and grew like Topsy. Investors wrung their hands as Apple plodded along as a niche "artist-designer" brand with no more than about 5% of the market share. A trifling $4B annual sales company making a niche product.

Pretty nice position to be in, actually, waiting for a breakout moment with a few key products and a CEO change.

First HDD iPod was something completely different than the traditional core business, arriving in an already crowded field where they were not the originators nor particularly innovative, at first. Almost an ugly duckling compared to what was already available.

They seized the moment, largely by tapping into fierce brand loyalty--and a personality cult. (Said as I type this on a MBP).

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Originally Posted by Ed Kelsey

They should just invest in Apple stock and give up making things.

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Probably too late for that.

Those that invested in Apple when it was in the crapper are the ones that cashed in.

Bob G.

Kodak is out of iPod innovations, what they need is a guy named Jobs, Steve Jobs, a total control freak that steers the company into the the current century. Screw the inkjet business, they can't come in this late in the game and put out junky products just because they are painted yellow and black.

A real innovation would be to put the film division on it's own and create a more streamlined version like Harmon's Ilford. Right now they have product confusion. I am no longer looking to see what Kodak has, I go straight to Ilford and the other brands. When they killed paper and the really time tested great films that was the time they called it quits.

Kodak has been a has been now for a few decades.

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Originally Posted by rguinter

Probably too late for that.

Those that invested in Apple when it was in the crapper are the ones that cashed in.

Bob G.

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off-topic, but...

I remember when Apple shot from $20 to $40. I kicked myself and said "damn, I missed the boat." Then it split and went to $80, and I thought, "geez, this time I really really missed the boat." Etc, etc, etc...

Apple is down about $30 from its recent peak. Not to spoil the surprise, but I guarantee they're working on cool new products as we speak.

This is certainly not investment advice, but... there's never a bad time to get into Apple.