Roger Hicks
Veteran
Quote from an ex-Ilford guy, who left in the reorganization: "The management bet the farm on inkjet paper and NEARLY won..."
It was a close-run thing.
Cheers,
R.
NLewis
Established
The film division has been Kodak's most profitable recently, but revenue continues to shrink quickly at about a 20% a year rate. That may even accelerate as Hollywood goes totally digital with the recent introduction of the Red Scarlet etc. etc. type cameras. We are seeing the kind of breakthroughs in digital cinema cameras now that we saw in digital still cameras around 2005, when there was little practical reason to stick with film for pros.
It is hard to manage a business with revenues shrinking at 20%+ per year. However, a bankruptcy filing does help a lot, because it cancels existing employment contracts. Unfortunately, a lot of union-type employees such as those at Kodak got rather grossly distorted employment benefits, especially pension and healthcare benefits that were extravagantly expensive. For example, General Motors used to have employment costs of something like $89 an hour, of which $28 was the actual wage. Everything else was pension and healthcare, because when you allow early retirement after thirty years and people retire at age 48, and then you're paying for that person and healthcare for the person's whole family long after they stopped working, that gets real expensive. You can still have a decent $28-an-hour job with $8 in benefits and a pension at 65, but you need to go through bankruptcy to get there.
It is hard to manage a business with revenues shrinking at 20%+ per year. However, a bankruptcy filing does help a lot, because it cancels existing employment contracts. Unfortunately, a lot of union-type employees such as those at Kodak got rather grossly distorted employment benefits, especially pension and healthcare benefits that were extravagantly expensive. For example, General Motors used to have employment costs of something like $89 an hour, of which $28 was the actual wage. Everything else was pension and healthcare, because when you allow early retirement after thirty years and people retire at age 48, and then you're paying for that person and healthcare for the person's whole family long after they stopped working, that gets real expensive. You can still have a decent $28-an-hour job with $8 in benefits and a pension at 65, but you need to go through bankruptcy to get there.
NLewis
Established
There seems to be some confusion as to what Kodak's business actually is. This is from the 3Q11 quarterly report:
http://investor.kodak.com/phoenix.zhtml?c=115911&p=irol-newsEarnings
Consumer Digital Imaging Group Segment (CDG): This segment provides a full range of digital imaging products and service offerings to consumers. CDG encompasses the following SPGs. Products and services included within each SPG are identified below.
Digital Capture and Devices includes digital still and pocket video cameras, digital picture frames, accessories, branded licensed products, imaging sensors, and licensing activities related to the Company’s intellectual property in digital imaging products.
Consumer Inkjet Systems includes consumer inkjet printers and related ink and media consumables.
Retail Systems Solutions includes kiosks, APEX drylab systems, and related consumables and services.
Consumer Imaging Services includes Kodak Gallery products and photo sharing services.
Graphic Communications Group Segment (GCG): GCG serves a variety of customers in the creative, in-plant, data center, commercial printing, packaging, newspaper and digital service bureau market segments with a range of software, media and hardware products that provide customers with a variety of solutions for prepress equipment, workflow software, analog and digital printing, and document scanning. GCG encompasses the following SPGs. Products and services included within each SPG are identified below.
Prepress Solutions includes digital and traditional prepress equipment, consumables, including plates, chemistry and media, related services, and
packaging solutions.
Digital Printing Solutions includes high-speed, high-volume commercial inkjet, and color and black-and-white electrophotographic printing equipment and related consumables and services.
Business Services and Solutions includesworkflow software and digital controllers, document scanning products and servicesand related maintenance offerings. Also included in this SPG are the activities related to the Company’s business solutions and consulting services.
Film, Photofinishing and Entertainment Group Segment (FPEG): This segment provides consumers, professionals, cinematographers, and other
entertainment imaging customers with film-related products and services. FPEG encompasses the following SPGs. Products and services included within each SPG are identified below.
Entertainment Imaging includes entertainment imaging products and services.
Traditional Photofinishing includes paper and output systems and photofinishing services.
Industrial Materials includes aerial and industrial film products, film for the production of printed circuit boards, and specialty chemicals.
Film Capture includes consumer and professional film and one-time-use cameras.
Here were their profit and loss for the nine months ending September 30:
Consumer Digital Imaging Group Segment: Sales of $1,142 million. Net loss of ($350m).
Graphic Communications Group Segment: Sales of $1,975 million. Net loss of ($171m).
Film, Photofinishing and Entertainment Group Segment: Sales of $1,152 million. Profit of $2 million.
http://investor.kodak.com/phoenix.zhtml?c=115911&p=irol-newsEarnings
Consumer Digital Imaging Group Segment (CDG): This segment provides a full range of digital imaging products and service offerings to consumers. CDG encompasses the following SPGs. Products and services included within each SPG are identified below.
Digital Capture and Devices includes digital still and pocket video cameras, digital picture frames, accessories, branded licensed products, imaging sensors, and licensing activities related to the Company’s intellectual property in digital imaging products.
Consumer Inkjet Systems includes consumer inkjet printers and related ink and media consumables.
Retail Systems Solutions includes kiosks, APEX drylab systems, and related consumables and services.
Consumer Imaging Services includes Kodak Gallery products and photo sharing services.
Graphic Communications Group Segment (GCG): GCG serves a variety of customers in the creative, in-plant, data center, commercial printing, packaging, newspaper and digital service bureau market segments with a range of software, media and hardware products that provide customers with a variety of solutions for prepress equipment, workflow software, analog and digital printing, and document scanning. GCG encompasses the following SPGs. Products and services included within each SPG are identified below.
Prepress Solutions includes digital and traditional prepress equipment, consumables, including plates, chemistry and media, related services, and
packaging solutions.
Digital Printing Solutions includes high-speed, high-volume commercial inkjet, and color and black-and-white electrophotographic printing equipment and related consumables and services.
Business Services and Solutions includesworkflow software and digital controllers, document scanning products and servicesand related maintenance offerings. Also included in this SPG are the activities related to the Company’s business solutions and consulting services.
Film, Photofinishing and Entertainment Group Segment (FPEG): This segment provides consumers, professionals, cinematographers, and other
entertainment imaging customers with film-related products and services. FPEG encompasses the following SPGs. Products and services included within each SPG are identified below.
Entertainment Imaging includes entertainment imaging products and services.
Traditional Photofinishing includes paper and output systems and photofinishing services.
Industrial Materials includes aerial and industrial film products, film for the production of printed circuit boards, and specialty chemicals.
Film Capture includes consumer and professional film and one-time-use cameras.
Here were their profit and loss for the nine months ending September 30:
Consumer Digital Imaging Group Segment: Sales of $1,142 million. Net loss of ($350m).
Graphic Communications Group Segment: Sales of $1,975 million. Net loss of ($171m).
Film, Photofinishing and Entertainment Group Segment: Sales of $1,152 million. Profit of $2 million.
Roger Hicks
Veteran
cosmonaut
Well-known
Let's all get together here at RFF pitch in and buy the patients for Trix and Tmax and find some third party to make it for us, then we will never run out.
kdemas
Enjoy Life.
Very informative post, thanks! Just FYI... the FPEG (Film, Photofinishing and Entertainment Group Segment) group was eliminated this past week and "film" and related items will be folded into another organization. That's what happens with 20% year on year declines in revenue (though still profitable, for now).
Crossing my fingers that they can stay afloat with some of my fav films, like TX. Given their economies of scale, fixed costs and diminishing revenue from the sector I'm not too optimistic...but there's always hope!
Crossing my fingers that they can stay afloat with some of my fav films, like TX. Given their economies of scale, fixed costs and diminishing revenue from the sector I'm not too optimistic...but there's always hope!
Kodak unions
Kodak unions
Everyone talks about Kodak's unions. Kodak did not have unions. They set up the employee's with some of the best benefits and pensions in Rochester. The only plant that was unionized was duPont, which had a local union from the old Defender Photo Plant, which duPont bought. That union tried to strike twice, but duPont had plans for all non-exempt and exempt salary to run the plant and break the union. That worked so well for duPont the bulldozed everything down to a gravel lot a few years back.
The problem with Kodak is the "legacy" things, like attitude, pensions, salaries and patent strategies.
A lawyer is now President, when it should be a former emulsion chemist or coating engineer. The problem for the film business is that it will be very difficult to downsize the coating lines. They are designed to run at 1000's of feet per minute for a huge market.
All they will need is a small alley, an air knife coater and festoon dryer running at 30 fpm to meet the film demand.
I'm hoping Adox will want to go this way, as it's the only economical way to make film for the volumes needed.
Otherwise, you make a film run, and it never gets sold out before it expires.
Still ad sad day for former Rochester natives.
Kodak unions
Everyone talks about Kodak's unions. Kodak did not have unions. They set up the employee's with some of the best benefits and pensions in Rochester. The only plant that was unionized was duPont, which had a local union from the old Defender Photo Plant, which duPont bought. That union tried to strike twice, but duPont had plans for all non-exempt and exempt salary to run the plant and break the union. That worked so well for duPont the bulldozed everything down to a gravel lot a few years back.
The problem with Kodak is the "legacy" things, like attitude, pensions, salaries and patent strategies.
A lawyer is now President, when it should be a former emulsion chemist or coating engineer. The problem for the film business is that it will be very difficult to downsize the coating lines. They are designed to run at 1000's of feet per minute for a huge market.
All they will need is a small alley, an air knife coater and festoon dryer running at 30 fpm to meet the film demand.
I'm hoping Adox will want to go this way, as it's the only economical way to make film for the volumes needed.
Otherwise, you make a film run, and it never gets sold out before it expires.
Still ad sad day for former Rochester natives.
PatrickONeill
Well-known
DerekF
Established
Hope Tri--x wont die
It probably won't die off in the near-term, but if you read their Chapter 11 filing, it's pretty obvious to me that Kodak will be divesting itself of its film business as part of its ongoing reorganization:
I don't see how maintaining a film division fits in with completing their transformation to a "digital business". My guess is they will try to milk the film division for as much as they can (i.e., raise prices to increase revenue until they discover the market can no longer support the increases) before they either sell it to someone else or kill it off entirely. It will ultimately depend on whether anyone can step in with enough money to make it worthwhile for Kodak. Otherwise, they will probably just write off their losses and leave the old machinery to rust or be used for spare parts. The next year should be pretty "interesting"...
Argenticien
Dave
I wonder what it would cost to cart all that machinery off to Samobor. Those Efke chaps seem to know how to keep second-hand film manufacturing kit running for a few decades.
--Dave
David Murphy
Veteran
No disagreement about patents and innovation, just disagreement about the particular patents Kodak is using to try and extract revenue from other companies. Here they are:
U.S. Patent No. 6,292,218 – “Electronic Camera For Initiating Capture of Still Images While Previewing Motion Images”
U.S. Patent No. 7,210,161 – “Automatically Transmitting Images from an Electronic Camera to a Service Provider Using a Network Configuration File”
U.S. Patent No. 7,742,084 – “Network Configuration File for Automatically Transmitting Images from an Electronic Still Camera”
U.S. Patent No. 7,453,605 – “Capturing Digital Images to be Transferred to an E-Mail Address”
U.S. Patent No. 7,936,391 – “Digital Camera with Communications Interface for Selectively Transmitting Images over a Cellular Phone Network and a Wireless LAN Network to a Destination”
Anyone can read find and read these using Google.
These patents are all (to me at least) straight forward and obvious applications of long existing network and computer technology (some of which dates back to the 1970's or earlier). These patents have been granted within the last few years. They are being used in conjunction with lawyers to generate revenue and have little to do with innovation.
What I find particularly amazing however, is that apparently Citigroup, a titanic multinational financial and banking firm thinks these patents are valuable too and has loaned the Chapter 11 Kodak nearly a billion dollars based on this assumption. I'd go short on Citigroup personally.
Deniz Merdan
Established
So someone tell me why the hell i got a 'sorry we can no longer get portra 400 in bulk anymore' answer from my local photo store today?
I am going in to buy all the trix and xtol they have tomorrow.
I am going in to buy all the trix and xtol they have tomorrow.
starless
Well-known
"We remain committed to make film as long as there is profitable demand for it. And as I noted, it is still profitable."
http://www.bjp-online.com/british-j.../news/2140216/-film-division-profitable-kodak
http://www.bjp-online.com/british-j.../news/2140216/-film-division-profitable-kodak
fergus
Well-known
That article has a very positive feel!
One never knows, and I don't pretend to understand companies trading under 'bankruptcy' but perhaps if the film division is genuinely profitable and can stand on it's own then there is hope.
Personally I wish Kodachrome had not gone away but I realise I live in the past
One never knows, and I don't pretend to understand companies trading under 'bankruptcy' but perhaps if the film division is genuinely profitable and can stand on it's own then there is hope.
Personally I wish Kodachrome had not gone away but I realise I live in the past
Trius
Waiting on Maitani
I have corresponded directly with Audrey in the past; the interaction was both positive and pleasant.
Trius
Waiting on Maitani
Kodak is in that business, as a supplier of equipment and materials to the on-line services as well as point of sale kiosks. How big they are, their share of the market, etc., I don't know.
ibcrewin
Ah looky looky
Here are my 2 cents...
I see this restructuring as a major opportunity to save kodak film. Kodak is just a brand. The machines and the people who make the film are the heart and soul of what we expose light onto. Suppose kodak sells off the film business to say Freestyle. The same machines, and the same people will be making the film. The trick here is to sell the film arm to someone who values it and isnt' going to drive it into the ground.
Kodak film is alive and kicking, the demand isn't enough for the supply to make it profitable in its current state. But if you settle the debts, manage your costs, I think it can become something more stable like an illford, or a efke.
This is only my theory.
I see this restructuring as a major opportunity to save kodak film. Kodak is just a brand. The machines and the people who make the film are the heart and soul of what we expose light onto. Suppose kodak sells off the film business to say Freestyle. The same machines, and the same people will be making the film. The trick here is to sell the film arm to someone who values it and isnt' going to drive it into the ground.
Kodak film is alive and kicking, the demand isn't enough for the supply to make it profitable in its current state. But if you settle the debts, manage your costs, I think it can become something more stable like an illford, or a efke.
This is only my theory.
N
Nikon Bob
Guest
Cutly
Established
This is abslutly not right.
In fact, photography in itself is the proof that patents are not always an help. (please excuse my english, I'm french) Photography grew very fast because no one had a patent on it, it was inventend on many places pretty much at the same time and this, and the lack of pattents, helped the business focus on better product instead of lawyers and other conservative strategy.
As you might know, in the US, the use of patents were forbidden for a certain period of time to all technologies concerning aviation and plane stuff. The idea behind it was that they wanted the aviations compagny to grow fast and focus on being always ahead in terms of quality, realiability, innovation and so on. With the use of patent, you can patent a key techonology, and then just earn money from it without being innovative anymore, and worse, you can force the oser compagnies to not use this key technology it as well. As the US wanted to grow fast they decided that the best ways were to accept no patents on this precise industry, and they were right, because then the competition were all about the products, not about earning money from an idea.
n5jrn
Well-known
Not vain at all. Their film division is still profitable. Why would Kodak close down a money-maker?