Kodak files Chapter 11.

[systemoverblow'd]

http://money.cnn.com/2012/01/19/news....htm?iid=HP_LN

Eastman Kodak, the once mighty icon of the photography industry, filed for Chapter 11 bankruptcy protection Thursday.

Kodak's (EK, Fortune 500) stock plunged 35% at the start of trading. The New York Stock Exchange suspended trading within a few minutes after the opening bell.

The company said it has obtained $950 million in financing from Citibank to maintain operations. The company said the credit facility is still subject to court approval.

Kodak said it has enough liquidity to continue operating during the bankruptcy process.

Kodak acknowledged, in its Chapter 11 filing, that it had more than 100,000 creditors, with debts totaling $6.75 billion.

Kodak company also said that it had assets of $5.1 billion, with properties in Rochester, N.Y., Windsor, Colo. and Weatherford, Okla.

Kodak's top creditor is the Bank of New York Mellon (BK, Fortune 500) in its role as trustee for other bondholders, with claims of more than $650 million.

Other creditors include Sony (SNE), Nokia (NOK), WalMart (WMT, Fortune 500), Target (TGT, Fortune 500), Best Buy (BBY, Fortune 500), Office Max, Disney (DIS, Fortune 500) Studios and CVS (CVS, Fortune 500).

Kodak has long struggled to evolve from film and compete in the digital age, even though it was an early pioneer of digital photography.

For months, bankruptcy rumors have dogged the venerable company, which was founded by George Eastman in 1888.

In September, Kodak tapped $160 million from a pre-existing $400 million credit line, prompting Moody's to downgrade the company's debt securities, pushing them further into junk territory. Just over a month later, the company warned that it could run out of cash if it failed to sell a number of its patents, raised additional capital or borrowed more money.

In its most recent attempt to stay afloat, the Rochester, N.Y.-based company looked to raise cash by exploring the sale of more than 1,100 patents, or 10% of the company's patent portfolio, which had the potential of generating $3 billion, according to analysts.

And earlier this month, the company streamlined its corporate structure.
Polaroid goes digital with Android

Kodak has been struggling to evolve in today's digital world. The shift from film upended the company's business model, causing sales to shrink almost in half from 2005 to 2010 and profits to dry up completely.

In fact, Kodak has only posted one full-year profit since 2004. Analysts surveyed by Thomson Reuters have estimated that the company will end 2011 and 2012 in the red, too.

In addition to licensing its technology, Kodak has been trying to develop its printer and digital camera business. The company also retired its traditional film brand Kodachrome in 2009, after 74 years.

Amid its financial demise, Kodak's stock has also suffered considerably. Shares tumbled almost 90% last year to penny stock status.

Kodak was delisted from the S&P 500 in December 2010, and was dropped from the Dow Jones industrial average in 2004

[Hugh Conway]

except for Apple I don't believe anyone in the digital world is making the kind of money Kodak was in it's prime - film & paper minted $$$$$$

[Chainsaw_Willie]

It's really too bad they weren't able to stay ahead of the emerging technologies that are displacing them.

[Hugh Conway]

It's really too bad they weren't able to stay ahead of the emerging technologies that are displacing them.

Perhaps I wasn't obvious enough earlier. They invented or spent lots of time developing the "emerging technologies that are displacing them". They met internal resistance because they couldn't make as much money on the new stuff as they did on the old, and except for Apple nobody is making the serious $ on the new. Destruction, not much creation. I realize the news had various talking heads babbling about if Kodak had developed "digital camera" leadership or some such... it never would happen like that; there's no "film like" market role.

[Verde]

there's no "film like" market role.

Well, there's ink from inkjet printers, but they were way late to that market.

[brice618]

Perhaps I wasn't obvious enough earlier.

For posterity.

[Chainsaw_Willie]

And yet companies like Canon and Fuji seem to be doing okay. That's kind of what I meant. Doesn't matter how much of a tech leadership role they may have played early on if they weren't able to capitalize on it due to "internal resistance."

Sorta like the heads of the buggy whip manufacturing companies must have been. "No, stay the course, this automobile thing is just a fad."

[SchralphMacchio]

Perhaps I wasn't obvious enough earlier. They invented or spent lots of time developing the "emerging technologies that are displacing them". They met internal resistance because they couldn't make as much money on the new stuff as they did on the old, and except for Apple nobody is making the serious $ on the new. Destruction, not much creation. I realize the news had various talking heads babbling about if Kodak had developed "digital camera" leadership or some such... it never would happen like that; there's no "film like" market role.

Clay Christensen. The Innovator's Dilemma.

Now required reading in any b-school program that's worth a damn.

[huckbucket]

They had ridiculous overhead to boot. My father in law worked there for 40 years and had unbelievable stories about inefficiency and entitlement. Guess that comes with the territory when you're making bank. I liken it to a huge oak tree that was never pruned. One stiff breeze ....

[SchralphMacchio]

Another one that applies is Geoffrey Moore's Dealing with Darwin - about how massive companies have really innovative people who come up with good ideas for business, but they don't know what to do with them (the people or the ideas).

[Gregger]

Kodak actually invented the first digital camera but refused to put much effort into commercializing it because of a fear of cannibalization of their analog products. Canon/Nikon etc quickly took over that space and sealed Kodak's fate.

Refusal to innovate ruined yet another great company.

[Chainsaw_Willie]

It sounds more like refusal to accept reality.

Anyone who couldn't see that film was dead as soon as the first digital cameras came on the scene was living on a river in Egypt.

[Hugh Conway]

Kodak actually invented the first digital camera but refused to put much effort into commercializing it because of a fear of cannibalization of their analog products. Canon/Nikon etc quickly took over that space and sealed Kodak's fate.

By "quickly" you mean 30 years? By Nikon "quickly tookover" you mean Nikon lended bodies to Kodak for Kodak to put their tech in to make the first "Nikon" dSLR? http://www.mir.com.my/rb/photography...odak/index.htm I realize you are just spewing from some script but think first

Compare and contrast the film manufacturers margins (any of them at the time - Kodak, Ilford, Fuji, AGFA) to the camera makers margins - there was more profit in film. Would you sacrifice 30% margins (or 25% or whatever) and 90% marketshare for 5% margins and smaller marketshare? Kodak likely made more profit in the intervening time "refusing to accept reality" than they would have accepting it....... Shit - look at the marketshare for Canon/Nikon that "tookover"

Another one that applies is Geoffrey Moore's Dealing with Darwin - about how massive companies have really innovative people who come up with good ideas for business, but they don't know what to do with them (the people or the ideas).

err - my point is it wasn't really a "good idea for business" compared to what they were doing. At least if you think of business as making lots of money. I contrast this to Xerox which let lots of really good money making ideas slip away at PARC.

You can quote cliche business books if you want but the structure of the "film" companies - lots of different segments involved in with your really good product, is very different from the digital imaging business. Digital imagin there's far more that's industry and segment specific to be successful, there's no logical reason to amalgamate them together.

[SchralphMacchio]

^ No, the point of those books is that you pretty much have to accept that you will cannibalize your existing revenue streams, but it's better that you be the one to do it than your competitors - because you can't fight the fact that your customers and your business is always changing. When I said "good for business," I meant "good for long term adaptation."

Often a company will come up with an innovative idea that they have no idea how to manage. Spinoffs and JVs are some of the recommendations in the books - to remove some of the innovative business from the primary management stream, because when looking at it from a "business today" standpoint it never makes sense.

The Christensen book talks about understanding the pattern of development for disruptive technologies - how they are adopted in initial niche applications that operate at a much lower performance. In the case of hard drives, it was 3.5" disks that only could hold 100MB compared to the large 5" disks or larger 8" disks that were used for mainframe computers. But there was an initial market need for small sized drives in personal computers ... and now today you have high-reliability servers running on 2.5" laptop drives (and flash storage is moving in that direction as well). Or how about LCDs that could at first only display 256 colors at large pixel sizes and slow response? They sucked for professional graphic demands, but worked great for mobile computing platforms. And now you can't find a single graphic artist operating CRTs. The thing about these technologies is that, while they do not initially perform as well as the ones they are displacing, they have some fundamental difference in approach that gives them radically different properties. These properties allow them to displace the established technologies in niche applications with niche needs (such as small size, light weight, high buffer speed, instant feedback, or other properties valued in the niche applications) where the primary function's performance (storage size/speed or visual quality in my examples) can be sacrificed. Then as the new technologies mature they keep moving upstream until they completely displace the established way of doing things in the main markets (the old tech becomes niche).

Digital imaging technology was very much a "classic" disruptive technology that followed the upstream trend really well - first starting in low-performance applications and now displacing almost all commercial uses for film imaging. That is the reason I cited those books.

The books talk about having the foresight to recognize these patterns before you become that dinosaur that is stuck in the tar pits while the agile feathered birds are flying circles around you. They talk about the challenges of having innovative people on staff, but not knowing how to manage their innovations because they run counter to the primary business inertia. The books are pedantic, ego-stroking, and not always to the point, but the concepts in those books are now required learning in any B-school that has tech innovation as a focus.

[Hugh Conway]

The books talk about having the foresight to recognize these patterns before you become that dinosaur that is stuck in the tar pits while the agile feathered birds are flying circles around you. They talk about the challenges of having innovative people on staff, but not knowing how to manage their innovations because they run counter to the primary business inertia. The books are pedantic, ego-stroking, and not always to the point, but the concepts in those books are now required learning in any B-school that has tech innovation as a focus.

Who are these "agile feathered birds" in the industry? Because the ones that have been pointed at - Nikon and Canon - aren't that agile and happened to be in the better segment (camera makers, esp high end ones) and will likely get swallowed when the niche they were in (cameras) goes away as it is starting to.

[single]

Anyone who couldn't see that film was dead as soon as the first digital cameras came on the scene was living on a river in Egypt.

maybe not dead. Had a bad stroke and operating at partial capacity maybe.

The new portra is proof positive of that point. What a film.

[teletripper]

Being I shoot Oly (yea I know 4/3 is kinda dieing) I didn't give it much thought but I happen to be doing some work in one of the Kodak's heirs condo's in Vail and just though oh oh am I going to get paid?

[Chainsaw_Willie]

maybe not dead. Had a bad stroke and operating at partial capacity maybe.

The new portra is proof positive of that point. What a film.

I should've qualified that statement with "in the consumer market." That's where the biggest profits were, selling rolls of film and chemicals for processing at Rite-Aid/Walgreens/Wal-Mart/etc. The idea that regular people could buy a digital point-n-shoot and never have to go back to the store again just makes too much sense.