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Readers divided on Kodak's emergence from bankruptcy

Rochester Business Journal
January 27, 2012

A slight majority of respondents to this week’s RBJ Daily Report Snap Poll say it’s unlikely that Eastman Kodak Co. will be able to achieve its goal of emerging from Chapter 11 as a profitable and sustainable business.

When Kodak and its U.S. subsidiaries filed Chapter 11 bankruptcy petitions last Thursday, the company said the move would enable it to pursue the sale of non-strategic intellectual property assets and resolve legacy costs while reorganizing to focus on its most valuable business segments.

“The process will allow Kodak to continue normal business operations while we accomplish our objectives and emerge a profitable and sustainable enterprise,” the company said.

Fifty-three percent of respondents say it’s unlikely Kodak will achieve its goal of emerging from bankruptcy, including 12 percent who say it’s not at all likely.

Thirteen percent are very optimistic about Kodak’s survival, and 34 percent say it’s somewhat likely.

Nearly 650 readers participated in this week’s poll, which was conducted Sept. 20 and 21.

In your opinion, how likely is it that Kodak will emerge from Chapter 11 a profitable and sustainable business?
Very likely: 13%
Somewhat likely: 34%
Not very likely: 41%
Not at all likely: 12%

COMMENTS:

(Antonio Perez) has ruined an American icon company with his decisions. He missed the boat that Kodak was/is a "chemical company,” not a digital electronic company like HP. Unless they replace him with a brighter mind that can mine the IP and patent portfolio, Kodak is doomed.
—Daniel Driffill, Condee Vending

I’d say yes if they were not selling off their patents. But that is too much like killing the goose.
—Jay Ross

As a former 35-year employee, I find it extremely depressing and disappointing that management was so lacking in proper forethought and innovation. When I joined the company in 1963, it was like being part of a family. We worked hard to gain the trust and admiration of our “parent,” and in return we received care, support and a gainful future. Today, through disregard of our sincere efforts, we have become orphans to inept “parents.” I, along with thousands of employees and retired folks, mourn the death of our family. Too bad Kodak wasn’t in the energy business; we’d probably get a sizable government loan.
—Warren Geller, North Las Vegas, Nev.

With the current executive team, their current strategies are destined to fail. They still are having their heads in the sand. They can cut costs, eliminate employees and continue to shrink Eastman Kodak as a business; their current business model will not bring Kodak back. If Antonio Perez is willing to learn from Steve Jobs by taking $1 per year in salary, this would be a good start.
—Patrick Ho, Rochester Optical

The digital and social media era is in its infancy. Unfortunately B&L, Kodak, Xerox Corp. and other large U.S. corporations did not listen to their technical visionaries. They invested too late to be competitive in this new market. … Too much focus on near-term revenue at the sacrifice of the future. Unfortunately, the only people who will profit from intellectual property sales and licensing are the lawyers and financial backers. Thank you, Kodak, for the investment in Rochester growth.
—Ed Schlueter, president, Medgraph Inc.

Being an ex-employee (third generation), I want Kodak to succeed. After being terminated, I looked at Kodak from the outside in and listened to many people give me their opinion of what went wrong in my travels since 2005. The one reoccurring message that successful innovative companies kept telling me speaks to their possible success after bankruptcy for Kodak is to create a vision that knows itself and knows what creates value based on its strengths. I knew Kodak to be almost “Jobsian” in its ability to know what people wanted in film; in fact, Steve Jobs always spoke about photographic innovation as his model. Fuji has done an excellent job in this regard in growing revenue based on non-photographic applications of film technology. I would like to say that I see Mr. Perez’s vision. I still have emotion for Kodak, hopefully without being emotional.
—Dave Lincoln

Kodak has repeatedly missed the boat and has a management team stuck in the 1900s. Write it off.
—Joe Fabetes, Rochester

Kodak will only survive and return to profitability with the resignation of its entire board of directors and the appointment by the Bankruptcy Court of a CEO with a proven track record of turning companies around—someone with vision and a plan.
—Harry Caruso, Caruso Asset Management

The horse left the barn so long ago, it’s gone. The legacy costs are staggering and likely insurmountable. I predict in the end Hilco will buy the trademark and park it next to Polaroid.
—David Fiegel, Blackbird Asset Services LLC

Guess a Rochester-based company doesn’t qualify as “too big to fail,” huh? What is the problem? Why didn’t the government just throw a bunch of cash at it, leave the broken model in place and write down their debt and tell everyone that things are all better now? Isn’t that the role of government?
—Devon Michael, Chili

Thanks to George Fisher and his ilk, you can stick a fork in Kodak. It’s dead.
—Jim Duke, Victor

Unable to give Kodak's management for being able to come up with a sustained plan to keep the company alive. Sad to say for remaining employees, just hope "captains" remain aboard until the ship sinks.
—Erin Schmerbeck

I don't think they have a chance unless they lose Perez pretty quick.
—Grant Osman

I hope all this is a wakeup call to the board and current management. I can't help but think there is a substantial "improvement opportunity" for both.
—Bob Worden, Penn Yan

Personally, I think Eastman Kodak’s only hope is for someone to buy them out and move them forward. The past management and boards have allowed it to slip beyond the point of no return.
—JA DePaolis, Penfield

My opinion is based upon an expectation that there is a change in top management, which will consist of leadership that will want to restore the company, not just eradicate it.
—Bruce Bowen, retired

We hope.
—Ed McDonnell

I hope Kodak can see the err of its ways and see its the Rochester people that made what it was and that they find their way back to manufacturing in Rochester. Local support. Local product that will reach out globally to the new economy.
—David DeMallie

Why do people continue playing Monopoly after they are forced to mortgage their important properties? No one has ever won the game of monopoly after this happens. But it seems to be human nature to play on until the gory finish despite the fact that they can't come back. Unfortunately, the Monopoly scenario is most likely the destiny for Kodak. The stupid moves of several past leaders has the current leaders mortgaging their most valuable assets to try to launch a commodity business; wow, what a grand strategic direction! Seems like the main objective of current leadership is continue playing to sustain their own compensation as long as possible to the inevitable end. Of course, they seek to eliminate "legacy costs" (company commitments that past employees made decisions around) to lengthen that milking process. We can just hope that "what comes around goes around" is true.
—Bob Moyer, Eastman Kodak retiree

I believe that Kodak has set the table for what their future may look like by reorganizing into two business segments: consumer and commercial. I believe the consumer segment will be sold upon emerging from bankruptcy and the New Kodak will be much smaller and only serve the commercial world. The consumer division is not profitable and behind the technology curve and carries too many legacy costs from the film days. The commercial segment should be profitable where Kodak holds some competitive advantages and is far better positioned without the legacy costs from the film days. Filing for bankruptcy protection will allow Kodak to execute this type of strategy.
—Mike Guche, CFO, Canfield & Tack Printing

There are many things that are not in support of Kodak becoming a profitable and sustainable business. The internal structure, if left untouched, does not support this premise. The senior leadership, if left untouched, does not support this premise, and one could possibly say the quality of the products does not support this premise. Kodak has always been an innovative company, sometimes in a lagging mode, but always regaining and positioning themselves as a world leader. The occasional price paid to do this is the quality and longevity of the product. Kodak was THE world leader in imaging. I believe one will have difficulty capturing what the company's identity is today. Many new imaging innovations have been devised and I believe Kodak does not know how to capitalize on them. They are not working these new innovations to their advantage. Years ago they lost the concept of workers being assets to the company. The current senior leadership does not convey any skill or proficiency at managing a global company at global standards. Until Kodak recognizes the global market they CAN compete in, the likelihood of success will remain very low. To take 130 years of history and destroy it in a way the current leadership has does not support the thought that this leadership can lead the company into the future. It is very sad.
—William Nash, Ultrafab Inc.

It can survive only if Antonio and anybody related to his team goes. Selling patents is idiotic. That’s how they got here. Bring in an innovator who can leverage the intellectual property—what is left of it. Damn the stock value. Save the company. The ruin of Kodak started with Kay Whitmore and all who followed, who were concerned only with daily stock value and not long-term viability. SO many Kodak inventions that didn’t come to market because of that type of leadership. No real vision. Take what’s left, dust off the patents get some additional venture capital and build it back up. All it takes is a little vision.
—Karl Schuler

There has never been a strategy to take advantage of what used to be one of the best known brands in the world, and some very good intellectual property. That is lost now, Kodak is known in Rochester, but generation Y has had no exposure to the brand, and it is now worth a fraction of what is was 15 to 20 years ago. As for product, there is nothing left. All the jewels have been sold. Cheap ink-jet is not a growth strategy, just a small flotation device holding up some hope.
—Sergio Ruffolo, JR Language Translations Services Inc.

Unfortunately, Eastman Kodak's ship has sailed into the night. They let the technological revolution pass them by. Kodak was a good provider and corporate citizen to Rochester for more than a century, but the time has come to shut turn off the lights and move on. There is nothing wrong with that, we all need to be thankful for all that George Eastman built and gave to the great Rochester community!
—Tony Schmitt, self-employed

Eastman Kodak will emerge as a smaller company capable based upon a court submitted plan to become profitable. They will not be profitable coming out of Chapter 11. Kodak needs a serious make-over and a focused strategy into new market niches or areas where they can leverage certain patents. I think Kodak's days as primarily a consumer company are numbered and not a viable business to be in any longer. Kodak needs thinking, experienced, innovative leadership that no longer relies on consultants to reinvent Eastman Kodak.
—Dave Rusin

I do not believe the current CEO, Antonio Perez, has the leadership skills necessary to promote the company to recovery from Chapter 11. While looking to convert the company into a digital entity, Perez overlooked the last chance the company had to turn it into an IMAGING company, when he allowed Kodak Health Imaging to be let go. I believe that entity would have allowed Kodak to maintain the imaging business it was best at. I realize that many people say Kodak was a materials company, but imaging materials was the mainstay. As health care continues to be the highest growth area in the U.S., keeping Health Imaging would be the platform which, coupled with the graphic markets (printing) entity, could have saved the company, and kept its iconic image in imaging! Not only did Kodak have the IP, but it had the R and D people, who could have continued the pioneering Kodak did in the early part of the 20th century in imaging science. The spinoff of Health Imaging came on Perez’s watch, indicating to me that he lacks leadership vision on the course Kodak needs to take. I think it's toast!
—Hutch Hutchison, In T'Hutch Ltd.

It's time for Rochester to be thinking about the current drivers of our local economy, the local leaders and visionaries who will help create our regional future. Kodak, while it played a central role in this region, will never play the role it did in the past. It's time to move on!
—Brian A. Kane, Three Lakes Consulting

I certainly hope so. It would be sad not to see them be able to keep going.
—Karen A. Buesing

Unless there is a leadership change.
—L. Monaco

Kodak's survival depends upon its developing innovative products and re-acquiring a share in the imaging (formerly photographic) market. Kodak fumbled in the late eighties, early ‘90s after it developed some of the best digital cameras. Now it seems that Kodak may sell some of its patents in that field so what's left? Hopefully they continue to sell good cameras with the good glass optics that has always made a Kodak camera one of my first choices.
—Michael F. Kloppel

Not while Perez in the building—throw him out with the bad memories to create a new Kodak Moment.
—Ray Del Monte, Wolff/SMG

The only hope this corporation has is a takeover by something resembling competence and will to live; free of its decades of mismanagement, arrogance, nepotism, senseless, costly acquisitions and over-indulgence. To avoid organized labor, Kodak allowed itself to be governed without accountability from within or out. It paraded as an untouchable entity while competitors —and some not so quietly—chipped at its core business unabated. To the end—and even today as it struggles and gasps—EK would not accept the reality of change and that the digital society long ago left it behind, and whatever propriety it claims is a sad dream of culture set in another generation.
—Bruno Sniders, Webster

They need to fire Perez and the board of directors as well as freeze all executive compensation to have a chance. We hope for employees and retirees that they do.
—Bob Rutt, Kodak Retiree

With the present mindset and “business plan” of the present Kodak management the only outcome can be the death of the company. It need not be, but hope for a better outcome is slim. I have been a well-known scientist and product developer in photographic research and science. In this capacity, I followed all competing technologies to film. Thus, I feel that I am one of very few scientists, researchers and product-related people who can talk about the competing technologies with confidence. I know for sure that Kodak’s demise is not the result of digital photography appearing. They tried and failed due to lacking money, technology, manufacturing know-how, marketing know-how and skills and management support. Kodak has made many attempts to get into other peoples’ businesses in me-too approaches, including the present one into digital imaging. They almost always failed. They ignored in this process checking out their actual and potential competitors, their competitors’ financial status, and the state of the
competitors’ technical expertise in the area that Kodak tried to invade. Historical examples of their failures are their futile attempts to get into Xerox’s and Polaroid’s businesses, another one was their costly attempt to get into the pharmaceutical area with Sterling. Kodak’s present business plans fall exactly into the same patterns that has cost them dearly in the past. Kodak’s only native strength is and has been in the chemical area. Look at Eastman Chemical, which is doing very well. Film is a highly sophisticated chemical system and allowed Kodak to occupy a monopolistic place for a long time. They had only two competitors that counted (Fuji and Agfa) and who could compete with them. Kodak even failed living with this competition. Kodak still has the chemical strength to compete in the chemical imaging area. In the electronic and digital area Kodak has proven to be totally incompetent. In the inkjet area they also will be failing considering the competitors. I am doubtful under the present management that Kodak will focus on its chemical based system and make it work again for them. Film, especially movie-film is a very viable product which needs support. Will Perez ever support their film producers in Hollywood to continue using Kodak’s film? Previous CEO Carp told us that he was going to kill it. There is still a niche for film systems out there which digital cannot touch and which would allow Kodak to survive. Kodak has to stop trying to force their film into digital-technology dominated areas. Based on my experience, I published the potential for film vs. other imaging technologies in 2006 at the Rochester International Conference for Imaging Science. I am challenging Kodak to check this out. I am also available and willing to present this information to them. Thus, with the present mindset and “business plan” of the present Kodak management the only outcome can be death of the Company. It need not be, but hope for a better outcome is slim. A previous competitor to Kodak in Binghamton wound up making roofing paper.
—Ingo H. Leubner, Crystallization Consulting

1/27/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


 


What You're Saying 

Edward cOTTMAN at 10:25:27 PM on 1/27/2012
As a former Kodak shareholder, and a former HP Employee, when Perez was head of IPG at HP. He was a great leader at one time, but I guess even the great must learn to give in to failure. Now! Kodak isn't dead. I still believe in the Company. It should go private for several ...  Read More >
Dan Cahill at 9:29:14 AM on 2/7/2012
... changed the face of the markets they were supplying. When crunch time came for commercial printers etc. cutting unit costs took on a top of mind importance. Then came the Fuji juggernaught (excellent quality at a lower per unit cost). Market insensitivity/calousness 101 ...  Read More >

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