Why Kodak Isn’t Out of the Woods Yet


Kodak clawed its way out of bankruptcy this past Tuesday, but the Rochester-based company has a long climb yet.

There’s been plenty of talk on this topic over the past week, but most of it seem to be focused on what Kodak gave up to emerge from the shadow of Chapter 11. NBC News, for example, emphasizes the loss of consumer-oriented operations and a 50% reduction in yearly expected revenue when they discuss the “New Kodak Moment.”

Anyone with an appreciation for Kodak’s heritage is sure to feel a twinge of sadness over these developments, but it is still far too early to be asking if the sacrifice was worth it. The more important question is “will it work?”

To understand why Kodak is still far from safety, it’s important to understand why the company entered bankruptcy in the first place, and what it means now that it’s out.

Kodak headquarters circa 1900.

Kodak headquarters circa 1900

Typically, businesses declare bankruptcy when they are burdened by debts they can’t hope to pay off. They are then protected from the demands of creditors for a period of time, allowing them to either liquidate assets to pay debt, or restructure the business to return to profitability. It’s a beneficial system for both debtors and creditors because it helps businesses to pay off debts that would have just pushed them into oblivion otherwise.

When Kodak declared bankruptcy in January of 2012, the company had some serious debts to pay off, including $2.8 billion in unpaid pensions to former UK employees. To put that in perspective, the company is projected to bring in just $2.5 billion in revenue this year.

After selling more than a thousand patents and axing its consumer imaging operations, Kodak has now eliminated much of the debt that’s been hanging over its head. But even with the debt under control, one bankruptcy is often a sign of bad things to come.

Michelle White with the National Bureau of Economic Research points out that about a third of restructured companies need to go through the whole process again within the next few years. This phenomenon has led to the rise of the terms “Chapter 22s” and “Chapter 33s” for companies that have filed for Chapter 11 two or even three times.


In other words, dealing with debt doesn’t mean that a company has fixed the underlying problem that caused it to go into debt. And it’s not clear that Kodak has solved its biggest shortcoming: business strategies and focuses that are out of touch with present market conditions.

So far, Kodak has indicated that it will be relying on commercial printing as its “bread and butter,” but CEO Antonio Perez also freely admitted to Bloomberg that the company is “late coming into this market.”

Still, the promise on Kodak’s new website is that “technological expertise” will be its saving grace — a proclamation that seems eerily similar to one the company made in its zany 2007 promotional video, “We’re not playing Grab Ass Anymore.” With any luck, this “technological expertise” will be more useful this time around.

Kodak also has high hopes for its cinema film division. But as more film makers make the switch to digital cameras, manufacturing professional cinema film hardly sounds like a stable source of business. Perhaps that’s why Fujifilm stopped making the stuff last year.

Finally, Kodak is planning to capitalize on its name recognition by licensing out the brand to manufacturers of photographic equipment. The company has already formed a partnership with JK Imaging, who will be releasing a Micro Four Thirds Camera called the S1 later this year. As I pointed out in my last column, however, brand licensing is, at best, an easy way to pick a little extra revenue. At worst, it’s a liability to your brand.

So you see, despite the company’s emergence from bankruptcy, it’s likely Kodak will face hard times in the near future. Even if restructuring did the trick and put the company back in the black, we’re talking about a very different company than the historic Eastman Kodak many have come to revere.

On the bright side, the modern Kodak is now more divorced than ever from its photographic legacy. So whether the company rises or falls, it’s not likely to reflect much on the heritage that is displayed and celebrated by organizations like the George Eastman House.

Image credit: Kodak Instamatic X-15 by spDuchamp, Eastman Kodak HQ 1900 by Detroit Publishing Company and Kodak Tower Top by Thomas Belknap

  • hendrick

    and kodachrome????????????????????????????????????????????????????????????????????????????????????????????????????


  • photo_t_2112

    If the same administration is still in control I see Kodak dead is 5 years.

  • A_Lwin

    Kodak used to be so cool, now it just looks like a lame horse hobbling on when it should be put out of its misery.

  • Andy Umbo

    As I understand it, Kodak’s film business has gone to the Kodak British Pension department. Everyone knows there’s still money in them thar hills (hell, I’m a pro and still shoot 50% of my stuff on film, yes, because it’s better), if run correctly (look at what the Brits did with remaking Ilford). Streamlined manufacturing, and a ‘right sized’ production system may make the ol’ girl profitable yet. Everyone knew that Kodak was still making a profit on a lot of the films (and paper) they were making, just not enough for their terrible overhead and managers unable to change their internal system. Small batch reintroduction of Kodakchrome (and in-house processing), reintroduction of their last, best E-6 (E-100 G), on-going Tri-X manufacturing, small batch sheet film in any size (like Ilford does once a year through their dealers); priced for the volume and the quality users, could be the key.

    I can’t match film look without using the 16 bit, $50,000 large format DSLR’s, and I can’t price my work to replace that stuff every 5 years, so it’s film for some stuff and 12-14 bit 35mm styled DSLR stuff for the cheapskate clients and those that can’t tell the difference (basically anyone under 35). I need to keep that source of film coming (or someone needs to introduce 16 bit in a sub $5,000 package).

  • Alan Klughammer

    Sad to see Kodak going. I will be very surprised if they are still here in 5 years, let alone 10. They invented digital photography, but were too stuck in their ways to see the future.

  • David Vaughn

    I don’t want to sound like a jerk but…well…From everything I’ve read, humans can’t distinguish as many colors as 16 bit affords.

    The only advantage that film has to digital that I can see is that film still has better highlight roll off and the grain is much more attractive than digital noise.

    Having a “look” and being “better” are two different things and one does not always equate to the other.

    I shoot film casually and have a super ghetto darkroom in my back bathroom, but I’m not sure I would be confident enough to shoot film professionally, because chances are the client can’t tell the different between Tri-X and a Photoshop action.

    Now, if I had the means to shoot large format film, then I’d definitely love to use that professionally. But I think that’s a whole different ballgame than 35mm film. lol

  • anon

    I just don’t see why Kodak, nor FujiFilm cannot make a perpaid run of films.
    Ilford does this successfully with their ULF films.
    This would be a great way to keep films.
    They would be 100% sold, and no doubt, used.

  • tron_

    it’s not about being “cool.” it’s about making a profit.