Once ranked among the bluest of blue chips, Kodak shares sell today at close to $1. Kodak’s chairman has been denying that the company is contemplating a bankruptcy filing with such vehemence that many believe Chapter 11 must lurk just around the corner.
The Rochester, N.Y., company said it had $862 million in cash on hand as of Sept. 30, but at the rate it’s losing money from operations (more than $70 million a month), that hoard would barely last a year.
No wonder the company is trying to find someone to purchase its online photo sharing service for hundreds of millions. Even if it did manage to find a buyer, the sale would only buy a few more months of life unless the company can figure out how to stop the bleeding.
Here’s a video in which business-savvy photographer Sal Cincotta shares some tips on how to turn your photography service into an experience that your clients will remember and be excited to recommend to others.
Last week we reported that starting with Adobe CS6, only people who own the previous major release of the software (i.e. CS5 and above) will be eligible for upgrade pricing. Needless to say, Photoshop users are’t too happy about the changes, and now National Association of Photoshop Professionals president Scott Kelby is weighing in. In an open letter to Adobe, he writes,
While I understand that Adobe needs to make business decisions based on how it sees market conditions, I feel the timing of this new pricing structure is patently unfair to your customers (and our members). Here’s why: You didn’t tell us up front. You didn’t tell us until nearly the end of the product’s life cycle, and now you’re making us buy CS5.5 for just a few months on the chance that we might want to buy CS6 at a discount when it’s released. Otherwise, we have to pay the full price as if we were never Adobe customers at all.
Kelby also makes a plea for Adobe to either start the new policy with CS7 or to offer a tiered upgrade structure in which upgrade price is based on how recent your version is. That definitely makes more sense than having CS4 users pay full price to upgrade to CS6.
Here are some developments in the ongoing Olympus scandal: investors and a former director are currently calling for fired CEO Michael Woodford to be brought back to clean house and right the ship. At the same time, The New York Times is reporting that Japanese investigators are still trying to understand a $4.9 billion hole in Olympus’ financial records, and believe that over half of that amount were paid to organized crime groups in Japan. More specifically, the company is accused of being linked to Yamaguchi-Gumi, the country’s most infamous yazuka organization.
Earlier this month, Kodak sold off its sensor business in an effort to raise some cash to stay alive and hopefully turn things around. Now the company is looking to get even leaner by selling off its online photo sharing business. Photo sharing? Kodak? Yup, it’s called Kodak Gallery. While it’s not surprising that the camera maker has online services, what might be surprising is the price they’re looking to sell it for: according to the Wall Street Journal, it’s in the “hundreds of millions of dollars.”
Kodak first jumped into the online photo sharing and printing game in 2001, when it purchased Ofoto for somewhere south of $100 million. The service reportedly amassed 75 million customers worldwide and was bringing in $150 million in annual revenue at its peak. However, it has never been profitable and last month saw only 1.5 million visitors. In addition to the service itself, Kodak is selling off some of its valuable patents related to uploading and sharing photos online.
The financial scandal rocking Olympus is one that the company may not survive. The company’s stock price plunged another 17% today, and the Tokyo Stock Exchange has informed the company that it will be delisted if it doesn’t meet a December 14th deadline for reporting earnings. The New York Times has a great piece on how Olympus got itself into this mess:
In June 1998, a disturbing rumor tore through trading floors in Tokyo: Olympus had suffered colossal losses on derivatives trading, punching a large hole in its balance sheet. The company’s shares spiraled down 11 percent in three days.
But Olympus categorically denied the rumor and went on to post record profits. All was well in the house of Olympus, the newly installed president, Tsuyoshi Kikukawa, assured investors.
Turns out the losses were in fact real. They were so colossal, however, that booking all of them could have pushed the company into bankruptcy. The management then decided to fudge their numbers in an effort to save the company.
Olympus admitted today that its top executives used dubious acquisitions to sweep 20 years of massive losses under the carpet. At a press conference in Tokyo, new President Shuichi Takayama revealed that the 2008 acquisitions at the center of the company’s ongoing scandal were used to cover-up failed securities investments dating back to the early 1990s. Michael Woodford, the ex-CEO who brought the acquisitions to light, says that further inquiry is needed and that the company leadership needs to be purged:
This is a very big day. The big questions now are: who helped us – which outside companies? And what monies have they received? […] The position of the board and non-execs is untenable now.
The news immediately crushed Olympus’ stock, causing it to drop 29% in one day. The company has lost 70% of its market value since the scandal began in mid-October and is now facing major consequences — including the possibility of getting delisted from the Tokyo Stock Exchange.
After arriving late to the digital photography party, Kodak took another step away from the market yesterday by selling off its sensor business to CA-based firm Platinum Equity. The sale of Kodak Image Sensor Solutions (KISS) — which includes the company’s 263,000 square foot facility in Rochester — will hopefully give Kodak the boost of cash it needs to avoid bankruptcy and turn into a healthy business. Kodak sensors are found in a number of popular cameras, including the Leica M9 and S2.
Kodak’s fall from grace is an interesting case study that modern day companies can learn from. Even though the world’s first digital camera was invented by one of its engineers, the company was unwilling to cannibalize its film business that, at the time, was making money hand over fist. By the time digital cameras started catching on, Kodak had missed the boat. Read more…
In year 2008, something happened at Olympus that turned the company from an entity focussed on seven major business areas, into a company completely out of focus, blurred by a total of seventeen business areas, to include real estate, investments, consulting, waste disposal, labor dispatch, and running travel agencies. Igari Toshiro, former prosecutor turned anti-yakuza crusader, who was Japan’s greatest expert on white-collar organized crime aka the keizai yakuza (経済ヤクザ）and many veteran organized crime detectives have stated that one of the first signs that a company has been infiltrated by anti-social forces is a sudden and totally new change in company direction–especially into areas like waste disposal, labor dispatch (temporary staffing), and real estate—all areas where anti-social forces have carved out a large niche for themselves.
Just days after being fired, former Chairman Michael Woodford was quoted as saying, “There were $800 million in payments to buy companies making face cream and Tupperware. What the hell were we doing paying $800 million for these companies?”