Kodak, the rise, fall and rebirth

The Kodak name remains infamous, largely for its lack of vision that the digital age demanded, resulting in its eventual filing for bankruptcy in 2012. This once American icon did ultimately spring back, albeit with less impact on popular culture or the world of photography. Instead, today Kodak is a company of choice for advanced digital printing solutions.

Kodak History

Founded in 1888 as the Eastman Kodak Company, this once revolutionary enterprise was a symbol for innovation and creativity in the imaging industry. Its founder George Eastman seeked to revolutionise photography accessibility and in 1888 introduced the first mass-market camera, the Kodak No. 1, which came pre-loaded with film for 100 exposures. Two of Kodak’s most popular models were sold between 1900-1986, the Brownie, and 1968-1988, the Instamatic. 

Under the leadership of Eastman, Kodak grew to become one of the global leaders in film and camera manufacture, and for much of the 20th century, held a dominant position in photographic film. In fact, according to this article, “at its peak, about 70 percent of the U.S. film market, consumer or otherwise, was locked up for Kodak, and the company had a strong international distribution as well. The gross margins on film sales approached 70 percent as well; Kodak was selling a lot of film, and it was making them a ton of money.” Through its Kodak Research Laboratories, the company also went on to produce many technological innovations. So impactful was the brand that its tagline, “Kodak moment” continues to live on today when describing a personal event.

The rocky road to bankruptcy

Taking into account is unprecedented success and industry domination, the decades-long decline of Kodak commencing in the 1990s which culminated in the company filing for bankruptcy in early 2012 was staggering for multiple reasons. Primarily though was its rigid focus on its photographic film and cameras, to the extent that it neglected to foresee or acknowledge the impact that digital cameras would have on its core business.

All the more shocking was that Kodak would have had the time to mitigate this digital disruption as its own research demonstrated. According to this Forbes article, a 1981 study by Kodak’s then Head of Market Intelligence, Vince Barabba, looked at the core technologies and likely adoption curves around silver halide film versus digital photography. “The results of the study produced both “bad” and “good” news.

The “bad” news was that digital photography had the potential capability to replace Kodak’s established film based business. The “good” news was that it would take some time for that to occur and that Kodak had roughly ten years to prepare for the transition.” Despite the lengthy period of time the company had to prepare for the later disruption, they did little to manage the upcoming developments.

As a result of failing strategies in the pursuing years, combined with increasing competition from Fuji and Polaroid, Kodak experienced a continuous decline in its financial situation and stock value. In 2009, the company secured a $300 million loan from American global investment company Kohlberg, Kravis, Roberts & Co. (KKR) as part of its efforts to address financial challenges. To alleviate debts from previous investments, Kodak sold off several divisions, including the profitable Kodak Health Group, with the proceeds of $2.35 billion being used to fully repay approximately $1.15 billion of secured term debt. Consequently, around 8,100 employees from the Kodak Health Group transitioned to Onex, later renamed Carestream Health. The company was removed from the S&P 500 in 2010.

Facing mounting debts and decreasing revenues, Kodak explored alternative revenue streams, including engaging in patent litigation. In 2010, it received $838 million from patent licensing, including a settlement with LG. Over the period of 2010 to 2012, Kodak and Apple engaged in multiple patent infringement lawsuits against each other.

By 2011, Kodak’s cash reserves were depleting rapidly, causing concerns about potential bankruptcy. In June 2011, the company’s cash holdings were at $957 million, significantly down from $1.6 billion in January 2011. During the same year, reports suggested that Kodak considered selling or licensing its extensive patent portfolio to avoid bankruptcy. In December 2011, two board members appointed by KKR resigned. Analysts predicted the possibility of bankruptcy, and by January 2012, discussions with Citigroup were underway for debtor-in-possession financing. The company eventually filed for Chapter 11 bankruptcy protection on January 19, 2012, securing a $950 million, 18-month credit facility from Citigroup to sustain its operations.

Kodak was given until February 15, 2013, to come up with a reorganization plan, as per the terms of its bankruptcy protection. Eventually, the company was given approval for financing by the court at the start of 2013 and proceeded to emerge from bankruptcy in the middle of 2013.

Coming back from rock bottom

In 2014, Jeffrey J. Clarke was named the company’s CEO and a member of its board of directors. By the end of 2016, Kodak reported its first annual profit since bankruptcy. Today, the company is a leading global manufacturer focused on commercial print and advanced materials and chemicals. It is listed on the New York Stock Exchange under ticker #KODK. Institutional investors account for 47% ownership in the company, and as of November, 29, 2023, it has a market capitalization of just over US$296 million. Stock price per share as at close of November, 28, 2023 stands at US$3.7300.

According to its first-quarter 2023 highlights, the company has seen:

• Consolidated revenues of $278 million, compared with $290 million for Q1 2022, a decrease of $12 million or 4 percent (decreased by $2 million on a constant currency basis, or 1 percent).
• Gross profit of $50 million, compared to $33 million for Q1 2022, an increase of $17 million or 52 percent.
• Gross profit percentage of 18 percent, compared with 11 percent for Q1 2022, an increase of 7 percentage points.
• GAAP net income of $33 million, compared with net loss of $3 million for Q1 2022, an increase of $36 million.
• Operational EBITDA of $9 million, compared with negative $7 million for Q1 2022, an increase of $16 million.
• A quarter-end cash balance of $225 million, compared with $217 million on December 31, 2022, an increase of $8 million in the first quarter of 2023, compared with a decrease of $53 million in the first quarter of 2022.

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