MIKI-814 wrote:Kodak did very well indeed yesterday and no one has comments on this...
Please update all your pesimistic moods & news! :o
Who says Kodak did very well yesterday? Operationally, they are still bleeding cash. As of yesterday, their on-hand cash balance was approximately half what it was at the end of last year. Not good.
Yes, their stock price increased 72% yesterday to $1.34 from .78 but this was a market reaction to Kodak's announcement that it had no intention to file for bankruptcy (subtext... at this point in time). The market had high expectations that Kodak was going to file for bankruptcy at this point in time but because they announced the exact opposite, this resulted in a rise in its stock price. Tentative optimism that Kodak might still effect a turnaround.
Kodak hired a firm specifically to help restructure and turnaround the Company and hopefully avoid bankruptcy. I've been involved in business turnarounds and restructurings. It's always painful and it doesn't always succeed. It's like the surgeon who has to cut off a patient's leg or arm (and maybe additional appendages) in order to save the patient. Sometimes the patient still dies.
Labor is huge cost. So expect more job cuts.
But what about the film business part of Kodak? We know that the sales volume of film has dropped precipitously over the last five to ten years and is fully expected to continue to decline, although maybe not as rapidly as the past several years. I've heard Kodak say its film business is still profitable and yet in yesterday's Wall Street Journal Kodak restated this to say that the film business unit lost the least amount of money of all its business units. My guess is that the gross profits on film sales are still healthy despite shrinking sales volume but when you allocate all the overhead expenses that support the film business unit you end up with a net loss.
Assuming the turnaround plan does not include selling off the film business unit, the first thing the plan will do is slash as much of the overhead expenses as possible (admin staff, sales, marketing, customer service, etc.).
But the plan is also going to have to look at the gross margins produced by each individual film product still in production. And all low margin products will probably be eliminated. Keep the high margin products and milk them for all their worth while there is still a market for film and until Kodak has no choice but to get out of the film business entirely (assuming it survives as a going entity).
So what is Super 8?
I'm no expert and I have no inside knowledge. But I suspect its a low volume low margin product (well, we know its low volume). I imagine the costs of producing 50 feet of Super 8 (including slitting, cartridging, packaging) has to be higher than 50 feet of 16mm or 35mm of the same emulsion.
So where does this leave us? I don't know about you but it does leave me worried about Super 8.
It's my sincerest hope that Super 8 does survive somehow. Like all of you, I just enjoy shooting it and want to continue shooting for years to come.
I learned recently that one of Nikon's very last 35mm still cameras (FM-10) is not produced by Nikon at all. It is made by Cosina. But it is sold and marketed by Nikon. Perhaps Kodak might set up a similar arrangement for Super 8 and eventually all film stocks if it decided to get out of the manufacturing side of the business. I don't know. It sure would be great to hear from industry insider.
Hello? Any industry insiders?