Steven Sasson, credited with developing the first digital camera, holds the prototype he built in 1975. Photo credit: /Associated Press / AP
In a press release sent out late last week, a senior Kodak executive made a point to address the “speculation about the fate of Kodak Motion Picture Film over the last few weeks.” Kim Snyder, president of the company’s Entertainment Imaging Division and a VP at Eastman Kodak Company, went on to say that rumors and the volatility of the market wouldn’t distract the company from providing the “highest-quality tools to tell your stories.”
Well, let’s hope so.
We’ve noted before some of the particular problems facing Kodak.
For anyone involved in production who still appreciates the qualities of the chemical/mechanical manipulation of light, this is a troubling time. In a conference call last week, the company warned that its survival over the next year is contingent upon money raised from selling some of its famed digital imaging patents or raising money by selling debt. The latter is becoming an increasingly expensive proposition as the company’s future looks ever more problematic.
Kodak’s share price hit its high water mark in the mid-1990s at $90. Similar to a few other iconic American companies such as GE, at that point the company enjoyed a “safe buy” reputation, delivering to investors high and steady dividend yields. But that was the top, after which there began a market decline from which Kodak hasn’t recovered. Scratched in 2004 from its role as part of the Dow Jones Industrial Average, the stock now trades at $1.19/share (at press time).
The company, however, has weathered prophecies of doom before. A headline in a 2002 business journal warned about “Kodak’s Incredible Shrinking Film Business.” A Businessweek article in 2005, meanwhile, warned that “Low-margin digital sales aren’t picking up the slack of disappearing film profits.”
But a wider than expected loss of $222 million for the third quarter led to the most recent bleak prophecies. A turnaround to create its place in the digital future has been a long time coming. The company stakes its bet mainly on an innovative series of inkjet printers for consumers and businesses, which had a recent sales surge. (The company is also betting on packaging and work-force software.)
But slumping sales of digital cameras and lower revenue from its film operation offset that good news.
An added concern: while Kodak makes simpler digital cameras which benefit from the company’s image science to deliver more natural handling of colors, that market is now losing out to cellphones that offer comparable or better features.
An article by AP’s Ben Dobbin said that Kodak was planning to sell 1,100 digital-imaging inventions to raise enough money to stave off bankruptcy.
Dobbin went on to say that the company stayed “firmly focused” on its moneymaking film sales for too long and failed to “capitalize quickly on its new-wave know-how in digital photography.” That’s the shame, since the company had long been a leader in imaging with a core strength in R&D and wealth of digital patents. Steven Sasson, one of the company’s engineers, has a credit as the inventor of one of the first digital cameras in 1975. Kodak didn’t sell digital cameras for the mass market until 2001.
While the company soon pushed to the top in sales for digital still cameras by 2005, the profit margin was never as lucrative as film.
Kodak has come back from seeming disaster before. The move into high-speed printers and other markets may yet turn the company around towards a renewed future of growth. Patents will bring in money that just might keep investors betting on the company. IMAX, for example, recently licensed some of Kodak’s innovative laser technology which will enable it to augment its trademark film projection and instead fill 80-foot screens with high rez computer-based imagery. DPs have are promised a new VISION3 color negative stock.
Although one analyst quoted in a recent Times article by Andrew Martin likened Kodak to a juggler sitting on a unicycle in the dark, the article ended on a more upbeat note by broker Ulysses Yannas. Talk of Kodak’s demise was premature, Yannas said, since the company was spending their money on areas of the economy that are making money.
For those who still love the unique look and qualities of film, we certainly hope so.