Letters, feedback, get it off your chest: 10 January 2012

Andy McCourt swoops in with a Kodak history lesson, following reports the brand is seeking Chapter 11 bankruptcy protection.


Re: Print set to save Kodak


In recounting the history and stock values of Kodak it should not be forgotten that Eastman Chemical split off Eatsman Kodak in 1994, making two companies - the chemical-plastics one and the photographic/printing one.

Eastman Chemical continues to thrive with 10,000 employees, $5.8 billion in sales and record earnings. Its shares are over USD$41. I mention this because the legacy of George Eastman, founder of Kodak, is much larger than the photo-printing arm. Before 1994, Eastman Kodak was always a chemical company first - the film and photo business was a highly profitable vehicle for the manufacture, conversion and sale of chemicals.

As with Bayer's past ownership of Agfa, chemi-pharma firms work on very high profit margins and when they reduce much below 75% GP, the business model is no longer attractive, so they divest or split.

So, the article's $30 billion valuation placed on Kodak in the 1990s would have included the chemical business, which continues to grow. Unfortunately, the business model of film-develop-print has collapsed as a vehicle for those chemicals - they have found other markets. Plates also use much less chemistry than they used to in peak silver-halide days.

My view is that Kodak had a golden opportunity in 1994 to re-engineer its business once it split from the chemical side. Instead, management held onto outdated practices, technologies and processes and failed to capitalise on the digital revolution until it was too late.

The result, despite valiant recent efforts, is what we see now. There is learning to be had here, for our entire industry.

Andy McCourt