Kodak to sell OLED to LG

[Trius]

Regulars here know that I regularly defend Kodak, though I try to be fair since I've had my share of disappointments from the Great Yellow Father. I think the same is true of almost any company -- no one gets it right 100% of the time.

For some reason, this saddens me more than some other recent Kodak moves to sell off or cut brands/technologies, etc.

I'm not encouraging Kodak-bashing, but would be interested in some perspective on this move. Is it a good move due to the "major investment over a period of time" that Kodak feels it can't afford? Or is it lack of business acumen? Or cojones? Lack of commitment due to a view that OLED is simply not strategic.

Again, I hope the discussion stays thoughtful; if it turns into an anti-Kodak rant, I will delete the thread.

 

[ZeissFan]

Perhaps, Kodak believes that another superior technology will replace OLED, so maybe it figures that now is the time to cash in on it.

 

[Trius]

Hadn't thought of that -- it's a possibility. Or that no matter who owns the technology, consumer products will be too expensive. I.e., no one is likely to get a positive ROI.

 

[Al Kaplan]

They'll still have full access to the technology and the exact terms of the sale weren't in the story. It might be set up in such a way that Kodak would be getting a percentage of the revenue for as long as the technology is a viable commodity. That would hardly be a bad deal for Kodak.

 

[JoeV]

Kodak is in no position to gear up an OLED flat-panel display factory that can compete with the Asian firms (heck, I don't think any hypothetical US-based flat panel factory could successfully compete with the Asian companies, since the Asians pretty much invented the high-volume, large-sized-panel manufacturing technology, not even Intel).

So I don't see how Kodak could potentially bring this R&D-based technology into profitable, high-volume production; their only recourse, it seems to me, is to license or sell the patent rights while the value of the technology is still perceived to be sufficiently high.

I frequently read of innovative R&D from many universities across the US; but I don't see very much emphasis on how these theoretical ideas get translated into high-volume manufactured goods, which is where the profits are to be had. The fundamental issue, in my opinion, is not the lack of quality in university or private research, but rather in high-tech, high-volume, world-class efficient manufacturing in a domestic labor and regulatory market. If we can't crack that nut, then all the R&D in the world is just benefiting the high-volume Asian manufacturers.

~Joe

 

[Trius]

Joe: Kodak has been licensing the technology rights for some time. It seemed puzzling at first as to why they would give up that revenue stream (and potential additional licensing revenue from additional R&D,) now. Perhaps the global recession is hitting royalty revenue (as well as their other revenues) so hard that they are just giving up. They never intended to be a manufacturer of OLED products aside from one or two demonstration products.

 

[40oz]

Seems to me similar to a developer building a few homes in a tract, running sewer and water and paving the roads, then selling off the rest of the lots. Cash out while the property is worth money. Outsiders might question the move but the developer has the perspective that outsiders don't.

I'd rather Kodak divested itself of properties that don't turn a profit than hang onto everything in a desperate hope to one day, far far down the road, turn a small profit.

If nothing else, I'd rather see Kodak keep making film, graphis, and associated products, and as a side business be an "idea company," selling technology to others to monetize rather than sink their hard-earned profits into huge pits that can't pay off without billions of investment dollars. Retaining the rights to use said technologies is the smart move.

 

[Trius]

Good thoughts and comments. IBM's major source of income is (or at least was) royalties from IP (intellectual property, not Internet Protocol!), which surprises a lot of people. I just have this uneasy feeling that Kodak doesn't have the chops to be in that game. They've been so wedded to manufacturing and consumer products, that I have wondered if they have what it takes for such a huge shift. I dunno.

 

[jan normandale]

I've seen moves like this before in product development. Someone identifies a new technology then realizes that the cost to take it to the finish line is more than anticipated. They sell, let someone else finish the job and then buy back into the consumer technology.