Courtesy of Benzinga.
Eastman Kodak’s (NYSE: EK) name was once synonymous with quality product in the camera market. It defined the market, in fact. But the company’s stubborn refusal (or inability) to innovate as the digital age swept away film with a tidal wave of technology has resulted in EK filing for Chapter 11 bankruptcy protection on Thursday.
It is a spectacular fall from grace that would have seemed near-impossible twenty years ago. But a lot has changed in two decades, and few people use film anymore. Kodak has tried valiantly to keep up, but these times call for technological leaders, not followers. For that reason, Kodak quickly grew to resemble a dinosaur disguising itself as a cheetah, or an elderly gentleman trying to figure out how to insert his cassette tape into an iPod.
It is difficult to pinpoint exactly what Kodak should have done to survive. The problem for all companies in the camera market is that, in the digital age, we tend to not print out all of our pictures. Rather, we keep them on the computer and just print out the occasional one or two for framing. Even then, we tend to print them out ourselves.
Therefore, we are no longer paying for a permanent train of film and then development, instead we are just purchasing the occasional pack of photo quality paper, and ink cartridges. That was Kodak’s problem. Once the hardware is purchased, there was little in the way of recurring costs. Eventually, it caved.
According to CNN, EK said on Thursday that it has secured $95 million in financing from Citibank to stop it from going under completely. That credit is still awaiting court approval, but it does look as if Kodak will live to see another day while it continues to look for a buyer.
It is tough to see where a buyer is going to come from at this stage. After all, EK has been actively seeking one for a while.
Meanwhile, the company claims to have enough liquidity to maintain operations during the bankruptcy process, but admits that it has more than 100,000 creditors with debts totaling $6.75 billion.
However they twist it, things do not look good for Kodak. Bankruptcy is never a good sign for the future, and the company’s track record of late makes it less than attractive. Whatever the company claims the truth is, it is seen as an ancient peddler of obsolete products.
The future is bleak, but if Kodak is to have any chance of all of survival, perhaps it is that image which needs to be addressed first.
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