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    Kodak shares plunge as bankruptcy fears escalate

    By MICHAEL LIEDTKE - AP Business Writer | AP – Fri, Sep 30, 2011

    Investors dumped Eastman Kodak's stock Friday amid fears that the photography pioneer is headed toward bankruptcy.

    After its stock lost more than half its value in a volatile day of trading, Kodak tried to paint a rosier picture. "Kodak is committed to meeting all of its obligations and has no intention of filing for bankruptcy," the company said in a statement. The reassurance lifted Kodak shares in extended trading, but the rebound wasn't enough to undo the damage sustained in a brutal week for a hallowed name in U.S. business.

    The Wall Street Journal rattled Kodak's already jittery shareholders with a Friday report that the company has hired Jones Day, a law firm that dispenses advice on bankruptcies and other restructuring alternatives.

    Kodak confirmed the Jones Day hiring in its statement, describing the firm as one of several advisers helping its management turn around the Rochester, New York, company after losing nearly $1.8 billion since 2007. "It is not unusual for a company in transformation to explore all options and to engage a variety of outside advisers," Kodak said.

    Friday's news followed a Kodak disclosure earlier this week that the company was borrowing $160 million from a $400 million line of credit.

    The daisy chain of events convinced some investors that Kodak is running out of cash as it scrambles to adapt to the age of digital imagery.

    Eastman Kodak Co. shares plunged 91 cents, or 54 percent, to close at 78 cents per share. The stock regained 35 cents in extended trading after management defused the bankruptcy speculation. The shares stood at $2.38 at the beginning of the week.

    The selling was so intense during Friday's regular session that the shares temporarily stopped trading under the New York Stock Exchange's automated controls. At one point, Kodak's stock sagged to a new low of just 54 cents.

    After 131 years in business, Kodak finds itself on shaky ground largely because of the shift to digital cameras. That change, coupled with tougher foreign competition, has undercut sales of the film that made Kodak famous.

    To survive, the company has been mining its patent portfolio for additional cash. Since 2008, Kodak has pocketed nearly $2 billion in royalties and licensing fees. In July, Kodak hired investment bankers Lazard Ltd. to sell about 1,100 digital-imaging patents.

    The question now is whether those measures will be enough to keep Kodak afloat. The company had $957 million in cash as of June 30, down from $1.6 billion at the start of the year.

     

    150 comments

    • rippie dave
      rippie dave  •  7 mths ago
      this is pretty sad, since Kodak has more patents in digital imaging than any other single company, and were really the cutting edge company helping to create the technologies. it would be very sad to see Kodak just become a marquee silk-screened onto generic Chinese swill and dreck like Polaroid has become: a name with no relation to its former self or products. it would very sad indeed.
      • UTC LTV
        UTC LTV 7 mths ago
        Believe or not Kodak has become just that. It no longer makes printers and cameras. All of that went to Funai that makes them in China. If you get rid of production and engineering to some one else your products will never be on par with the competition.
      • rippie dave
        rippie dave 7 mths ago
        Chinese sub-contract manufacturing is a funny thing: the same factory makes top-flight Mac notebooks and junky low-end cheezy stuff for Target/WalMart.

        Their attitude is that they'll make it exactly as you design it, mistakes and all, and as well or poorly as you pay for, which means that the same product made better could be a contender in some maker's lines.

        Kodak have interesting co-marketing deals with lens companies and do try to have some forward leaning imaging chip technology in mid priced cameras, and could, if they chose to do, jettison the whole lower-end business and relaunch as a premium product line, even if it's modification of existing chassis to start, much as Sony did to get into the dslr business just as Minolta (sadly) announced they were leaving the camera business altogether. also, keep in mind that Matsushita (Panasonic, National and others) was a gamble getting into cameras... but their deal as the OEM maker of the Leica products has benefited both companies greatly, and i use Lumix (Pana versions of Leica) cameras which have the Leica glass on them. it can be done, though Kodak would have been better off going to a higher end company than Funai. in their defense, though, they have been around for decades and make many more "name brand" products than most people realize. even if something says Sub Zero or Gaggeneau, it comes from the same places that make Whirlpool or Amana. the key to Kodak's survival as a complete photography entity is design and excellent execution by their subcontractor builders. they've had some real hits, especially in the bridge-camera range, but some of their point-n-shoots are a crummy as anyone's in the $100-ish range.

        hopefully the cheerful yellow and red logo will be around a long time as more than just a memory inducing silkscreen on junk. new Polaroid film is being made in Eastern Europe in small batches for fans of those cameras, and it's good, from what i hear. so even the re-licensed use of the name may not be the end in every case.
    • Mateo
      Mateo  •  7 mths ago
      This makes me kinda sad, if Kodak had just kept up in the digital field and improved their printers and cameras they may've had a better chance. ohhhh well.
      • Max Reiner
        Max Reiner 7 mths ago
        Fk digital.
      • A Yahoo! User 7 mths ago
        It seemed like it was going pretty well up until the recession.
      • UTC LTV
        UTC LTV 7 mths ago
        Kodak hasn't made printers or cameras for years. Like Apple it had become merely a vendor of electronic products. Kodak printers and cameras are built by Funai in China. Apple computers and other gadgets are built by Foxconn in China as well.
    • A Yahoo! User  •  7 mths ago
      I worked for Kodak in their Digital Imaging division up until 2004 when they outsourced our jobs to lower cost workers in India and China, curtesy of the incentives in place for moving development and manufacturing overseas. That law is a direct contributor to the loss in American jobs.

      Regarding Kodak's current predicament, the bean counters didn't understand technology or how to manage the rapid changes and short product life cycles with diminishing returns. They went through CEO after CEO trying to find the magic formula and ignored the suggestions from the inner ranks claiming we were too technical to have viable and implementable suggestions. Many people don't know that Kodak released the first consumer digital camera under an Apple logo. Kodak management didn't want to release it as Kodak to protect their film retailers. Too bad it was a great company with amazing potential but poor management.
      • BobD
        BobD 7 mths ago
        Incompetent management has become pervasive in this country to the point where I am amazed that anything ever gets done anymore. Ad hoc methods become the norm because process oriented approaches do not leave room for political activities which is what most management people are primarily interested in doing. These methods have unpredictable results and rely on the heroics of subordinates to achieve what little success actually occurs.

        This problem is caused by the fact that human nature ( driven by greed) will always dictate how things are done in business. Once a company realizes that allowing management philosophy based on political motives to occur causes a significant hit on overall efficiency, and prevents that by implementing process oriented management style that rewards predictability, we will see more profitable companies. Since nothing happens without motivation and most businesses are getting along with the status quo in place, don't expect this situation to change anytime soon. Once Asia takes our remaining corporate capability from us, we might see some impetus to do things the right way. It will be too little too late I fear.
    • Dennis
      Dennis  •  7 mths ago
      Everything in this world has an end. Even this world.
    • Kimberly
      Kimberly  •  7 mths ago
      Kodak is a cautionary tale for the whole country. Adapt, or die trying to sell a brand with no product.
      • independent
        independent 7 mths ago
        But the government helps its croney friends. Why not this one? They also are trying to run Gibson Guitars out of business.
    • stardog
      stardog  •  7 mths ago
      100 year old companies are hard to change even in the face of modern reality.
    • Russ
      Russ  •  7 mths ago
      As Kodak goes, so go the American jobs.
    • George
      George  •  7 mths ago
      The problem is not failing to keep up with technology as some have suggested but rather a succession of brain dead CEO's that followed the ouster of Kay Whitmore, the last president that started and finished his career at Kodak. Whitmore and his predecessor Chandler had seen the handwriting on the wall for film back in the 80's. They diversified Kodak's product offerings to include things such as pharmaceuticals, medical diagnostics, copiers, publishing systems and video. In the name of appeasing wall street, Whitmore was booted for the likes of George Fisher who proceeded to cast off all that diversification in the name of "focusing on our core business of imaging". If Kodak was as diversified today as it was in the early 1990's it wouldn't be circling the drain. All of Kodak's current problems are directly traceable to Fisher's gross mismanagement of the company while lining his pockets.
      • howard
        howard 7 mths ago
        Well you could be right as i am not close to the company i cannot say.I still hope they advoid going bankrupt and the employee's are out of a job.
      • JimC
        JimC 7 mths ago
        George,you are 100% correct. I worked for Kodak in their Copier Division,until CEO Fisher sold us in 1997.He swore since we were digital imaging we were not in jeopardy,even though he knew he had us and all other non film,and camera divisions up for sale.
    • Scooby
      Scooby  •  7 mths ago
      I spent 20 years at kodak in its hayday. its a company that was grossly mismanaged and responded to late to inevitable change. Very top heavy company. When I started there in 1976 it was inconceivable that this day would ever happen. They shipped all our jobs to mexico and china.
    • PetranoEsq
      PetranoEsq  •  7 mths ago
      I'm a Rochesterian by birth. In the 40s-80s, Kodak employed most of my parents friends, relatives. With NAFTA, there's not much to be manufactured in Rochester but the best hot dogs on Earth.
    • JimC
      JimC  •  7 mths ago
      I worked for Kodaks Copier division from 1981-1997 until they sold off everything,Copiers,Sterling Drugs (Bayer Aspirin,Lysol,Formbys), Verbatim discs,etc.Instead of countinuing to diversify,they wanted to go back to film,camera,and motion picture.The stock at that time was over $80.00 a share.Even I knew they wouldn't thrive with only those 3 divisions.
    • Maryam Louise
      Maryam Louise  •  7 mths ago
      They were talking about this in December of 2010. I wrote an article about it titled "Not a Hoax - the Film Industry is Officially Dead with the End of KodaChrome Processing" by Maryam Louise.
    • John
      John  •  7 mths ago
      Kodak never fully committed to becoming a hardware company; their attempts at product were focused on low-tech and inexpensive consumer cameras (Remember the Instamatic? They were everywhere!), and were merely ways to drive film / chemical sales -- very successfully, I might add. They invented the "Gillette" model - that is, sell a cheap disposable razor and make your money on blades. It was doubtful that Kodak could ever compete in the high camera market with the likes of Canon, Nikon, Olympus and others grounded in high-tech fabrication from day one, but they let printer companies HP and Epson walk-away with their model and their raison detre -- image output -- with little fight. At the very least, Kodak could have been the HP of printers and output devices -- and should have been, if they had only made the right moves.
    • SouthSiderz
      SouthSiderz  •  7 mths ago
      A staunchly old company when it came to modernizing.
      If all you have left is an outta touch CEO, and a board of Directors of also outta touch 'Yes Men', you will fail.
    • flitetym
      flitetym  •  7 mths ago
      Let's put this all into perspective. Apple today, is what Kodak was 100 years ago. The same will happen to Apple, Google, and others. Companies that usher-in the future, are eventually consumed by it. Life — and progress — is brutal, my friends. "Buy with the good buying, and sell with the good selling. Eat ... or be eaten". No wishful thinking, corporate bail-out, or government program can stop progress. So to Kodak, "thanks for the memories", but it's out with the old, and in with the new.
    • Dragon Dagger
      Dragon Dagger  •  7 mths ago
      If you bring in bean counters to run your business don't count on much innovation, just a lot of bean counting until the creditors come for their money in bankruptcy court. Kodak has had many chances to success in copiers, cameras, video, printers and more without much innovation. Let's hope there is no governmant bail-out money available to Kodak.
    • Mike
      Mike  •  7 mths ago
      Guess my stock options @ $68.00 are pretty worthless!
    • Robert
      Robert  •  7 mths ago
      Eastman Kodak at 54 cents. What is this world coming to?
    • Wade L.
      Wade L.  •  7 mths ago
      I used to work for Kodak as part of their Health Imaging business. When they sold off the health business in 2007 I knew Perez was driving the company into the ground and the end of Kodak was near. Health Imaging was the only profitable business in the company. There was no future. Their stock has gone from $25 straight down the toilet. Glad I got out then.
    • ShawnH
      ShawnH  •  7 mths ago
      If Kodak is going bankrupt - then who is loaning them 160 million bucks?
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