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Most are not optimistic on Kodak's outlook

Rochester Business Journal
August 30, 2013

More than two-thirds of respondents to this week’s RBJ Daily Report Snap Poll say it is not likely that Eastman Kodak Co. will return to sustained growth and profitability once it exits bankruptcy protection.

More than 80 percent, though, believe Kodak’s decision in January 2012 to file for reorganization under Chapter 11 was the right one.

Attitudes about Kodak have changed little since similar questions were posed in polls conducted in October 2011 and January 2012. In the 2012 poll, which was done shortly after Kodak’s Chapter 11 filing, readers were more closely divided on the likelihood of Kodak emerging from Chapter 11 as a profitable and sustainable business; 53 percent said it was not likely.

In the 2011 poll, 68 percent said it was unlikely that an independent, Rochester-based Kodak would return to sustained growth and profitability.

Attitudes about Rochester’s ability to thrive without Kodak have changed somewhat, however. In the 2011 poll, roughly three-quarters of respondents said Kodak was important to the future health of Rochester’s economy. By contrast, 57 percent of respondents to the current poll chose that answer.

With final approval from a U.S. Bankruptcy Court judge, Kodak expects to complete its reorganization and exit Chapter 11 on Sept. 3.

In its restructuring since filing for bankruptcy court protection on Jan. 19, 2012, Kodak has reduced legacy costs and exited or spun off a range of non-core businesses and assets.

The “new Kodak” is very different from the company that existed prior to its bankruptcy filing. It has exited its traditional photography businesses and projects annual revenue of some $2.5 billion, down from more than $13 billion a decade ago. Over that period Kodak’s global workforce has shrunk by roughly 80 percent; about 3,500 of its employees are here, down from more than 20,000.

The company plans to operate its commercial imaging portfolio as two business segments—Graphics, Entertainment & Commercial Film, and Digital Printing & Enterprise—and projects a return to profitability in 2015.

Roughly 630 readers participated in this week’s poll, conducted Aug. 26 and 27.

In your opinion, how likely is it that Kodak will return to sustained growth and profitability?
Very likely: 4%
Somewhat likely: 27%
Not very likely: 46%
Not at all likely: 22%

On balance, do you believe Kodak’s decision in January 2012 to file for reorganization under Chapter 11 was the right one?
Right decision: 81%
Wrong decision: 19%

In your opinion, how important is Kodak now to the future health of Rochester’s economy?
Very important: 9%
Somewhat important: 34%
Not very important: 44%
Not at all important: 13%

COMMENTS:

Rather than dominating the economy of Rochester, the new Kodak will be woven in as a part of the economy. The technologies, well-trained workforce and manufacturing facilities that Kodak contributed to other companies in the community will have a huge impact on the economy of Rochester for decades to come.
—Bill Pollock, Optimation Technology Inc./Kingsbury Corp.

Too bad George (Eastman) couldn’t come back!
—Dave Kaspersin, Dynamic Recording Studio Independent Label/Dynamic Web Pages

If (previous CEOs) Kay (Whitmore) and Colby (Chandler) couldn’t make the “elephant” dance, what basis is there to make one believe that Brad (Kruchten) and the others can make the “mouse” dance?
—Jerry McCabe, Irondequoit

Both the senior executives and the board don’t understand and know what is Kodak all about. Without knowing the essence of Kodak, they’ll continue to run the company to the ground. Filing bankruptcy and the subsequent emergence only extend the cash-milking process by senior management until the company’s businesses are depleted. Kodak only exists in memories. For all intents and purposes, it is a goner.
—Patrick Ho

Ten years ago, there was a day care center in a building near our office. If back then a committee composed of any five of the children, selected at random, were charged with managing the affairs of Kodak, the corporation’s shareholders wouldn’t be any worse off than they are now, thanks the leadership of Antonio Perez.
—Steve Hooper, Health Economics Group Inc.

It is a tribute to the Rochester community to have its onetime largest employer go bankrupt and the economy do OK. Several suppliers, employees and retired employees got hurt badly, but as a whole, the economy did better than the national average. This business with Perez requesting a $1.9 million bonus after coming out of bankruptcy is a joke, and I hope the courts have enough sense to prevent (it). Perez should be returning his bonus he received prior to filing bankruptcy.
—Mike Hogan, Information Packaging

Kodak has become the Titanic of American business, and it is incredibly sad and tragic because it did not have to be that way. This was an avoidable collapse, a slow-speed train wreck, a series of squandered opportunities. Where is the accountability of the board of directors who should have discharged the CEO years ago? Enjoy your millions, Mr. Perez. At least Capt. Smith had the decency to go down with his ship!
—Duane Piede, North Coast Energy Associates

Kodak’s decision to focus on the professional printing industry is an unfortunate one. This industry is being decimated by the Internet! More and more companies are choosing to put their advertising dollars on the net, where millions can view, as opposed to printing hard copy, which must then be delivered.
—Jerry Lighthouse, CPM, CPIM Advanced Purchasing Technology LLC

As long as Perez is in charge and the markets they have currently defined remain their focus, Kodak’s future is in big trouble.
—David Wagner

All businesses, not unlike humans, have a life cycle. Fair enough. However, what happened to Kodak—what has transpired during the “bankruptcy” transition and what appears to be the “next steps”—tells me both Kodak management and the “rubber stamp” non-existent directors have not learned a thing. Hence, the future is very, very dim.
—J.A. DePaolis, Penfield

Kodak is no longer the behemoth it once was. It’s too early to tell whether Kodak will rise to the heights it once held for so many years. Different time, different situation. I, for one, wish them well. If they do well, it can only be a positive for Rochester.
—Peter Bonenfant, Fairport

Kodak upper management and the board of directors have ravaged the company. There is no hope for a viable company without major management changes.
—George Dounce

I personally have zero faith in Perez, and I feel that they’ve chosen product lines for which I believe they have little expertise. In addition, the product lines they’ve chosen are not in growth industries. They should change the name to preserve whatever brand value remains in the Kodak name. I give them two years. Hopefully I’m wrong.
—Tim Young

Profitability = selling Kodak (to someone who knows how to run a business).
—Steve Wichtowski, Honeoye

You’re kidding, right? Kodak screwed up an 85 percent world market share of film. What do you think is going to happen to it starting over from a dead stop?
—Jay Birnbaum

If they had only kept Eastman Chemical in the fold … That will be the lasting legacy of George Eastman.
—Peter Short, Pittsford

More or less the same group is in upper management and on the board of directors. This will ensure that Kodak will not be profitable in the future
—Scott Seabridge

Kodak’s strategy might be new to Kodak, but it’s not new to the global economy. They will be competing with the likes of IBM, Accenture, HP and Xerox. They may do well, but that’s not what made it a great company in days gone by. Kodak was an innovator through most of its history. The Brownie camera was what we now call a disruptive technology. It is unlikely that their move into professional services with a focus on printing and packaging will yield any breakthroughs. Fortunately, Rochester has been adjusting to the demise of Big Yellow for 20 years and is now a thriving entrepreneurial economy.
—John Calia, CEO Group Chair, Vistage International

If Kodak is to survive, they need an executive staff that is knowledgeable on reorganization and structure that has high potential of survival. The Rochester economy fortunately has the colleges, hospitals and high-tech companies; Kodak would be a great asset as a viable employer and add to the bottom line of our economy
—Dorothy Egan, agent, Keller Williams Realty

Look at the fortunes now of Xerox Corp. and Fuji (Fujifilm Holdings Corp.): good management. Kodak was too late to see the need to change. Why Antonio Perez is still around, getting bonuses and consulting fees, baffles me. From all I can tell, the employees are still watching their backs and are not as motivated as they need to be to turn Kodak around. For Rochester’s sake, I hope Kodak makes it, but it will take more vision and forethought than we got with George Fisher and Antonio Perez. Is George Fisher still an adviser or consultant to Kodak?
—Clifford Jacobson M.D., Vanguard Psychiatric Services

The mismanagement goes back 25 years. The latest group is just another example of a CEO and board who were out of touch with changing market forces and simply slaves to a stock price. They were not cognizant of the long-term growth potential of the company and brand and focused on making quarterly profit percentages look good to please short-term investors and shore up stock value. Rather than capitalize on an R&D juggernaut that they created over a 75-year period, they spun off profitable segments and affiliated businesses created through research to concentrate on market segments outmoded by technology for short-term stock value. This failure will likely be a subject for many business school professors of how to mismanage the world’s most recognizable brand into oblivion in a very short time. J.C. Penney will be next.
—Karl Schuler

The travesty that is the tenure of Perez has done its damage. The legacy of a world-renowned, community-based, thriving business has been decimated by incompetence. The vultures that are the executive staff and board members should suffer the same fate they imposed on the Eastman Kodak Co. The lies and doublespeak at press conferences don’t baffle anyone; we just wonder how the press keeps parroting the words without investigative reporting. Why are there no investigations into the pollution legacy that these clowns are attempting to weasel out of; $50 million and somehow it’s a closed deal? Politicians selling us out again! It’s there for the public to see. The current air pollution is diminished due to low production, but the ground plumes and damage to the Genesee basin may outlive future generations. Look it up yourselves. Doesn’t Rochester have any investigative reporters anymore? Apparently not. Just keep bloviating Perez says this and Perez says that and walk away. He and his staff have earned millions … doing what?
—Lou Romano


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