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No one has expected that Eastman Kodak Co., (hereafter Kodak for short) which invented the first digital camera in 1975 put an end to its century’s business by a series of malpractices.
On January 19, 2012, Kodak, which was once referred to as “Yellow Giant” filed bankruptcy to the local court of New York City. Experts pointed out that the lordly and reserved attitude of Kodak not only hindered its transformation, but also put an end to its survival based on selling patents.
Bankruptcy Filing Report
About one year ago, a source close to Kodak said that the U.S. company was preparing for potential bankruptcy. Now it is dealing with the said “debtor-in possession financing” valuing 1 billion U.S. dollars to maintain the operation after the start of bankruptcy procedures. The source said that if Kodak failed in selling patents, the file for bankruptcy protection could be issued at the beginning of 2012. However, insiders from Kodak China said that the U.S. headquarters has already denied this saying in October.
Despite the denial, Kodak was frequently reported to be close to collapse. According to a report from Bloomberg in September 2011, as the market demand for traditional film kept decreasing and the competitive power of digital camera was increasing, the business of Kodak had a drastic decrease and the company was thinking carefully of many strategic choices including the bankruptcy protection. The news pulled the stock price of Kodak down by 60% on the day it came out.
Now the “rumors” turned out to be true. The “Yellow Giants” came to the end of his glory and life. After filing the bankruptcy, Kodak expressed the hope of recovering in 2012. Before that date, Kodak will use the 950 million U.S. dollars from Citigroup to restructure its businesses. It is known that the company has appointed Dominic DiNapoli, vice president of FTI Comsulting, as its chief restructuring officer.
Selling Patents Has Disadvantages
Presently, raising capital to survive is the primary task for Kodak. Apart from its century-old brand value, the most valuable assets are the more than ten thousand technological patents accumulated in 130 years. Kodak had begun to peddle its 1100 patents of digital imaging since last August, trying to turn these intellectual properties into cashes. It is known that Kodak earned 2 billion U.S. dollars through selling patents from 2008.
On December 23, 2011, Kodak appointed its director and general legal consultant Laura Quatela as its president. Before and after this appointment, Kodak had a series of new moves. Last November, Kodak sold its image sensor solution business to PE company Platinum Equity. One month later, it sold its gelatine business Rousselot Group. Selling these“beloved” businesses to increase their cash reservation is the most frequent thing Kodak is doing now. Pitifully, selling patents to raise capital has not boosted investors’ confidence for Kodak. As the analysts pointed out,“Kodak disappointed people no matter in cash flow, income increase and overall growth”. The most likely destination for the 130-year Kodak in the future is the textbook of the business school, as a negative case of failure.
“Kodak shortsightedly sells patents to earn its survival. Even though it could relive the shortage of capital, it will cast a shadow over its future development,” said the corporate strategy researcher Liu Bucheng.
Previously, these intellectual properties on sale have already attracted the attention from Microsoft, Apple and Samsung. But when the news about its possible bankruptcy, the potential buyers of Kodak’s patents might worry that the debtors might raise the appeal against them if they buy these patents. Therefore, they act very carefully in the process of buying properties.
Tougher Way of Transformation
In the “age of roll film”, Kodak once took two thirds of the global market. But when the “age of digital camera” came in 2000, its overlord position faced significant challenges, which forced Kodak to conduct transformations twice.
In September 2003, Kodak officially announced that it decided to give up its traditional film business and shifted its focus to the emerging digital products. However, the huge amount of investments put into the film market became a huge burden for Kodak to move into the digital market. In 2006, Kodak changed its company logo, deleting the images of “Yellow Box” and “K” which were used as of 1971. This means that Kodak began to break the connection with the roll film industry. In 2009, Kodak launched the second transformation, during which 50% of its jobs were cut.
Industrial analyst Li Guangyu said that the success and failure of Kodak could be attributed to roll film. During the“age of roll film”, Kodak indulged itself in the huge profits in the roll film industry. When the digital products swarmed into the market, Kodak’s transformation seemed to be slow and painful. After the advent of “age of digital camera”, its competitors Fuji Film and Konica Minolta gave up the roll-film camera and threw themselves into the field of digital camera while Kodak still lingered in the traditional roll film market and rejected radical reform. After missing the best opportunity of transformation, Kodak gradually lost its grace and now has to survive by selling patents. Kodak invented the first digital camera in 1975 but it was knocked down by the invention. Statistical data show that Kodak only saw profits in 2007 from 1997. Its market value decreased from the maximal 31 billion U.S. dollars in February 1997 to the current 2.1 billion U.S. dollars. In a dozen of years, 99% of its market value was gone.
“There are many factors to be blamed for Kodak’s present-day predicament. The most important one is that Kodak failed to recognize the industrial development trend when the ‘age of digital camera’ sprouted and conducted fast strategic transformation in spite of its technological accumulations,”Liu Bucheng said.
Kodak stated that it still held on in the field of digital camera. But actually Kodak’s digital cameras are rarely seen in the retail market.
Mr. Wang is the director of a large shopping mall of electronic products. He said: “The Kodak brand had a certain influential power in 2004 and 2005. At that time its digital cameras were sold quite well. But from then on the brand and products gradually faded away.”
Consumers are not very aware of the digital cameras of Kodak either. The journalists randomly asked some consumers about Kodak’s digital cameras. All of them still thought that Kodak was only engaged in roll films.
Yang Huanan, an expert studying digital cameras, the most impressive digital camera brand for today’s consumers are Nikon, Canon and so on. When referring to Kodak, most of consumers think that it is still a roll film producer. Kodak’s slow reaction to the market change and solitude from the market trend leads to its predicament of “futile transformation despite long-term attempts”.
Fate or Self-directed Tragedy?
Actually, the whole film industry is forced to transform. Maybe the peers’ transformation could serve as a good example and borrow experiences to Kodak.
After exploring and seeking multiplied market develop- ment, Fuji Film adjusted its original businesses of imaging(traditional roll film, digital camera and digital photofinishing), information (optical materials for printing, medical services and so on) and document handling to medical life science, high-performance materials, optical components, electronic imaging, document handling and printing. After the reorganization, the traditional roll film business only took 2% of the overall income of the company.
Last year, Fuji was put under heavy scrutiny because it reinforced its presence in the market of cosmetics. Actually, Fuji has been a cosmetics dealer for long. Its skincare product Astalift has seen increasing sales and market share since it was launched in Japan in 2007. In 2010 this brand realized the sale of 20 billion Japanese yen (about US$ 258 million). In addition, after earning its position in the Japanese market, Fuji began to spread Astalift to the international market with China as its first destination. Even the president of well-established cosmetics company Kose thought that the cosmetic products of Fuji “had certain influences in the market”. Lucky Film from China also trotted on the way of transformation. After realizing that the profits from product structure adjustment cannot maintain the continuous development of the company, Lucky Film chose the optical thin film (a kind of key material that is widely used in the optics, optical devices, as well as LCD screens for panel TVs and laptops) as the main orientation of industrial structure change on the basis of its digitalized business transformation. Gradually the company moved to the fields with an intense demand of technologies and capital as well as a high added value.
In the first nine months of 2010, Lucky Film’s section of optical thin film saw its income increase 102.3% year on year, accounting for 20% of the company’s total income. This section also contributed to 40% of Lucky Film’s profits. In September 2011, Lucky Film was integrated into China Aerospace Science and Technology Corporation and was positioned as the optical thin film provider for its parent company.
The advent of digital age led to the collapse of traditional film industry and forced the companies to seek business transformation. However, Kodak unfortunately became the only one meeting failure in the transformation and having to face the danger of transformation. This was because Kodak’s transformation was passive. Though the transformations of Fuji and Lucky Film could not be said to get a complete victory, they at least maintained the momentum of development.
Unquenchable Need of Changes
Kodak once thought that the age of roll film was eternal and the digital camera was only a temporary substitute. Is that true? Presently there are some Kodak’s photofinishing shops in China but the “Kodak” on these shops’ signboards seems to have not more meaning than a simple pair of words.
“Kodak’s photofinishing is costly. Most of our consumers do not use Kodak’s photo papers when developing simple photos. Only the students from the dance school use Kodak’s paper for developing big-size and high-quality photos,” said the director of a photofinishing shop.
This means that even in the traditional film industry, Kodak’s situation is not very optimistic. This adds more pain to Kodak’s existing environment. Yu Fei, a Chinese brand promotion expert said that Kodak might avoid the fate of bankruptcy and earned the chance of survival by finding a reliable partner with whom it could form an alliance.
On January 19, 2012, Kodak, which was once referred to as “Yellow Giant” filed bankruptcy to the local court of New York City. Experts pointed out that the lordly and reserved attitude of Kodak not only hindered its transformation, but also put an end to its survival based on selling patents.
Bankruptcy Filing Report
About one year ago, a source close to Kodak said that the U.S. company was preparing for potential bankruptcy. Now it is dealing with the said “debtor-in possession financing” valuing 1 billion U.S. dollars to maintain the operation after the start of bankruptcy procedures. The source said that if Kodak failed in selling patents, the file for bankruptcy protection could be issued at the beginning of 2012. However, insiders from Kodak China said that the U.S. headquarters has already denied this saying in October.
Despite the denial, Kodak was frequently reported to be close to collapse. According to a report from Bloomberg in September 2011, as the market demand for traditional film kept decreasing and the competitive power of digital camera was increasing, the business of Kodak had a drastic decrease and the company was thinking carefully of many strategic choices including the bankruptcy protection. The news pulled the stock price of Kodak down by 60% on the day it came out.
Now the “rumors” turned out to be true. The “Yellow Giants” came to the end of his glory and life. After filing the bankruptcy, Kodak expressed the hope of recovering in 2012. Before that date, Kodak will use the 950 million U.S. dollars from Citigroup to restructure its businesses. It is known that the company has appointed Dominic DiNapoli, vice president of FTI Comsulting, as its chief restructuring officer.
Selling Patents Has Disadvantages
Presently, raising capital to survive is the primary task for Kodak. Apart from its century-old brand value, the most valuable assets are the more than ten thousand technological patents accumulated in 130 years. Kodak had begun to peddle its 1100 patents of digital imaging since last August, trying to turn these intellectual properties into cashes. It is known that Kodak earned 2 billion U.S. dollars through selling patents from 2008.
On December 23, 2011, Kodak appointed its director and general legal consultant Laura Quatela as its president. Before and after this appointment, Kodak had a series of new moves. Last November, Kodak sold its image sensor solution business to PE company Platinum Equity. One month later, it sold its gelatine business Rousselot Group. Selling these“beloved” businesses to increase their cash reservation is the most frequent thing Kodak is doing now. Pitifully, selling patents to raise capital has not boosted investors’ confidence for Kodak. As the analysts pointed out,“Kodak disappointed people no matter in cash flow, income increase and overall growth”. The most likely destination for the 130-year Kodak in the future is the textbook of the business school, as a negative case of failure.
“Kodak shortsightedly sells patents to earn its survival. Even though it could relive the shortage of capital, it will cast a shadow over its future development,” said the corporate strategy researcher Liu Bucheng.
Previously, these intellectual properties on sale have already attracted the attention from Microsoft, Apple and Samsung. But when the news about its possible bankruptcy, the potential buyers of Kodak’s patents might worry that the debtors might raise the appeal against them if they buy these patents. Therefore, they act very carefully in the process of buying properties.
Tougher Way of Transformation
In the “age of roll film”, Kodak once took two thirds of the global market. But when the “age of digital camera” came in 2000, its overlord position faced significant challenges, which forced Kodak to conduct transformations twice.
In September 2003, Kodak officially announced that it decided to give up its traditional film business and shifted its focus to the emerging digital products. However, the huge amount of investments put into the film market became a huge burden for Kodak to move into the digital market. In 2006, Kodak changed its company logo, deleting the images of “Yellow Box” and “K” which were used as of 1971. This means that Kodak began to break the connection with the roll film industry. In 2009, Kodak launched the second transformation, during which 50% of its jobs were cut.
Industrial analyst Li Guangyu said that the success and failure of Kodak could be attributed to roll film. During the“age of roll film”, Kodak indulged itself in the huge profits in the roll film industry. When the digital products swarmed into the market, Kodak’s transformation seemed to be slow and painful. After the advent of “age of digital camera”, its competitors Fuji Film and Konica Minolta gave up the roll-film camera and threw themselves into the field of digital camera while Kodak still lingered in the traditional roll film market and rejected radical reform. After missing the best opportunity of transformation, Kodak gradually lost its grace and now has to survive by selling patents. Kodak invented the first digital camera in 1975 but it was knocked down by the invention. Statistical data show that Kodak only saw profits in 2007 from 1997. Its market value decreased from the maximal 31 billion U.S. dollars in February 1997 to the current 2.1 billion U.S. dollars. In a dozen of years, 99% of its market value was gone.
“There are many factors to be blamed for Kodak’s present-day predicament. The most important one is that Kodak failed to recognize the industrial development trend when the ‘age of digital camera’ sprouted and conducted fast strategic transformation in spite of its technological accumulations,”Liu Bucheng said.
Kodak stated that it still held on in the field of digital camera. But actually Kodak’s digital cameras are rarely seen in the retail market.
Mr. Wang is the director of a large shopping mall of electronic products. He said: “The Kodak brand had a certain influential power in 2004 and 2005. At that time its digital cameras were sold quite well. But from then on the brand and products gradually faded away.”
Consumers are not very aware of the digital cameras of Kodak either. The journalists randomly asked some consumers about Kodak’s digital cameras. All of them still thought that Kodak was only engaged in roll films.
Yang Huanan, an expert studying digital cameras, the most impressive digital camera brand for today’s consumers are Nikon, Canon and so on. When referring to Kodak, most of consumers think that it is still a roll film producer. Kodak’s slow reaction to the market change and solitude from the market trend leads to its predicament of “futile transformation despite long-term attempts”.
Fate or Self-directed Tragedy?
Actually, the whole film industry is forced to transform. Maybe the peers’ transformation could serve as a good example and borrow experiences to Kodak.
After exploring and seeking multiplied market develop- ment, Fuji Film adjusted its original businesses of imaging(traditional roll film, digital camera and digital photofinishing), information (optical materials for printing, medical services and so on) and document handling to medical life science, high-performance materials, optical components, electronic imaging, document handling and printing. After the reorganization, the traditional roll film business only took 2% of the overall income of the company.
Last year, Fuji was put under heavy scrutiny because it reinforced its presence in the market of cosmetics. Actually, Fuji has been a cosmetics dealer for long. Its skincare product Astalift has seen increasing sales and market share since it was launched in Japan in 2007. In 2010 this brand realized the sale of 20 billion Japanese yen (about US$ 258 million). In addition, after earning its position in the Japanese market, Fuji began to spread Astalift to the international market with China as its first destination. Even the president of well-established cosmetics company Kose thought that the cosmetic products of Fuji “had certain influences in the market”. Lucky Film from China also trotted on the way of transformation. After realizing that the profits from product structure adjustment cannot maintain the continuous development of the company, Lucky Film chose the optical thin film (a kind of key material that is widely used in the optics, optical devices, as well as LCD screens for panel TVs and laptops) as the main orientation of industrial structure change on the basis of its digitalized business transformation. Gradually the company moved to the fields with an intense demand of technologies and capital as well as a high added value.
In the first nine months of 2010, Lucky Film’s section of optical thin film saw its income increase 102.3% year on year, accounting for 20% of the company’s total income. This section also contributed to 40% of Lucky Film’s profits. In September 2011, Lucky Film was integrated into China Aerospace Science and Technology Corporation and was positioned as the optical thin film provider for its parent company.
The advent of digital age led to the collapse of traditional film industry and forced the companies to seek business transformation. However, Kodak unfortunately became the only one meeting failure in the transformation and having to face the danger of transformation. This was because Kodak’s transformation was passive. Though the transformations of Fuji and Lucky Film could not be said to get a complete victory, they at least maintained the momentum of development.
Unquenchable Need of Changes
Kodak once thought that the age of roll film was eternal and the digital camera was only a temporary substitute. Is that true? Presently there are some Kodak’s photofinishing shops in China but the “Kodak” on these shops’ signboards seems to have not more meaning than a simple pair of words.
“Kodak’s photofinishing is costly. Most of our consumers do not use Kodak’s photo papers when developing simple photos. Only the students from the dance school use Kodak’s paper for developing big-size and high-quality photos,” said the director of a photofinishing shop.
This means that even in the traditional film industry, Kodak’s situation is not very optimistic. This adds more pain to Kodak’s existing environment. Yu Fei, a Chinese brand promotion expert said that Kodak might avoid the fate of bankruptcy and earned the chance of survival by finding a reliable partner with whom it could form an alliance.