When you hear ‘Kodak moment’, the first thing that comes to mind is a rare moment captured on film. The fact that one company’s name could come to symbolize what we preserve on film speaks to Kodak’s importance…in its day.
Kodak was founded in 1880, and it was the Apple of its time. It was known for its pioneering technology… the company invented the film that allowed Thomas Edison to create the motion picture camera. By 1976 Kodak had a 90% share of the US film market, and accounted for 85% of camera sales. And in 1988 Kodak employed 145,000 people. Kodak shares hit a high of $94.75 in 1997, giving the company a market value of $31 billion.
Today the company is valued at around $162 million…and shares are priced in pennies, not dollars. The company has been cutting back for the past twenty years… and now employs 19,000 people. And the irony of the company’s decline is that it has fallen behind the competition in the technology that it invented. Kodak built one of the first digital cameras in 1975…and digital technology has been the undoing of the company’s traditional film and analogue photography business.
The problem is that the company didn’t capitalize on the technology it invented. It didn’t turn itself into a digital imaging brand. But its rivals did.
And now the company that was once an industry icon is starting to look like a relic. And desperate times call for desperate measures. Kodak has been trying to sell, ironically, its digital imaging patent portfolio for about a year now to raise enough cash to avoid insolvency. The problem is that the value of those patents erodes each day they sit unsold. And rumors have been swirling that the company will file Chapter 11… last week it was reported that the company is in advanced talks with Citigroup to obtain bankruptcy financing.
And to add flame to the fire, the NYSE warned that if Kodak can’t bring its share price over $1 in six months, it will be delisted.
Kodak is grasping to get its footing. Effective January 1st the company realigned its business structure, trimming itself from three segments to two: commercial and consumer. The idea is to simplify the organization so it can “capitalize fully on the tremendous technological capabilities” of the company. The problem is that should have happened about twenty years ago.
Last year Kodak lost 88% of its market value. And the company recently reported a $222 million loss for the third quarter…its ninth loss in three years.
The stock is absolutely a sell, and one that I would definitely not hold onto.
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