Over the last year, no news has been good news for Eastman Kodak. The company’s slow and painful climb out of bankruptcy has involved everything from corporate greed to lost patent wars and sub-par auction outcomes. But just a few weeks ago a flickering light emerged at the end of the tunnel for Kodak in the form of $793M in conditional financing.
In fact, since we last reported on the story, the loan amount has gotten even bigger. That sizable $793M has been upped to $830M, every dime of which Kodak desperately needs to get its hands on if it ever intends to escape bankruptcy. But as the saying goes: there’s no such thing as a free lunch — and definitely not one worth $830M. The banks that have agreed to help Kodak out made the financing conditional: Kodak doesn’t get the money unless the company’s long-awaited patent sale exceeds $500M. Read more…
Christopher Bonanos, author of Instant: The Story of Polaroid, has authored a lengthy piece for the Washington Post on what Kodak — and whoever buys its film lines — can learn from the fall of Polaroid. The article offers some interesting facts about, and insights into, the film photography industry:
Yes, Polaroid and Kodak made hundreds of millions of cameras. But that was never their principal business: The hardware existed mostly to sell film. This is what business-school professors call the razor-blade model, pioneered by Gillette: The razor is sold at minimal profit or even given away, and the blades sell for years afterward at a healthy profit margin. Amazon does the same with the Kindle, selling it cheaply to encourage enthusiastic e-book buying.
More than anything else, Polaroid’s desire in the 1990s to keep film sales up and film factories humming was what killed the company. When it should’ve been diving into a variety of digital businesses, Polaroid doubled down on analog-film production, building new production equipment and trying to economize.
The business model Bonanos describes is also known as freebie marketing.
What Kodak could still learn from Polaroid [The Washington Post]
Image credit: razor blade by scottfeldstein
Respected stock market analysis website Seeking Alpha doesn’t think too highly of the way Kodak CEO Antonio M. Perez is leading the beleaguered photo company:
It would not be the first time that Mr. Perez, who became CEO of Kodak in 2005, has attempted to receive a large payment for his services to the detriment of his company. We had concerns about Kodak’s compensation policies in May 2010, when we noted practices such as Mr. Perez’s having amended (for the fourth time) his initial employment agreement and received an ad hoc award of 500,000 stock options at a low exercise price of $4.54 in October 2009 for “retention purposes.” Although Mr. Perez’s compensation decreased by around 55% year over year to $5.7 million in 2010, it remained grossly disproportionate compared to those of his subordinates, given that the median pay for Kodak’s other named executive officers was only $1.1 million. This suggests that Mr. Perez’s board – which he also chairs – allowed him so much freedom that he was able to prioritize his own interest ahead of his staff, customers and investors.
Earlier this month, Kodak was given permission to stop providing health and welfare benefits to tens of thousands of retirees. The move came just months after the company asked for permission to hand out $13.5 million in bonuses to 300 executives and employees.
Kodak’s CEO Prioritizes His Compensation Even Amid Bankruptcy [Seeking Alpha]
Snapping mirror self-portraits may have gotten a huge boost from the introduction of digital photography and smartphoneography, but it is by no means a new activity limited to our era. The photograph above was created back in 1917 — nearly 100 years ago! It was snapped by an Australian flying ace named Thomas Baker when he was 20 years old.
Kodak has finally been thrown a lifeline. Yesterday, the beleaguered photography company announced that it had convinced banks to loan it $793 million in order to climb out of bankruptcy by the first half of 2013. The loan agreement comes with one big catch: Kodak must be able to sell its extensive collection of patents for at least half a billion dollars.
Since 2005, photographer and photography lecturer Robert Burley has been documenting the demise of film photography through film photographs. He has traveled around the world with his 4×5 field camera in tow, capturing the demolition of buildings, the equipment that once powered a giant industry, and the desolation of factories that were once teeming with workers.
The photograph above shows a crowd watching the implosions of buildings 65 and 69 at Kodak Park in Rochester, New York on October 6, 2007.
It seems like Kodak is having a hard time figuring out how to getting its finances back in the black. Kodak has announced its 3rd quarter financial results, and the numbers aren’t pretty — they’re downright ugly, actually. Despite raking in $1 billion over the three-month period ending in September (down 19% from the same period last year), the company still posted a net loss of $312 million (up from a loss of $222M during the same period last year).
Here’s an interesting piece of photo trivia for today: did you know that Apple’s similarities with Kodak don’t end with Steve Jobs modeling his career and his company after Polaroid? The ongoing dispute between Apple and Samsung is strikingly similar to the battle Polaroid had with Kodak many decades ago.
Kodak may be planning to sell its film division, but for the time being the business is still under the company’s control. The company announced yesterday that T-MAX P3200 is the latest in its lineup to be discontinued, citing the plummeting demand for ultra-high speed black-and-white film.
Kodak divisions are falling left and right as the company struggles to claw its way out of bankruptcy protection. After killing off its camera business and selling off its film business earlier this year, Kodak announced today that it will shortly be pulling out of the consumer printing business in order to focus on commercial printing.