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AnonymousInactivehttp://online.wsj.com/article/SB124698140642106403.html
IS KODAK CRACKING THE INKJET MARKET ?
Kodak CEO Bets Big on Printers,Perez Says Cash Sufficient as Photography Icon Tries to Crack Inkjet Market
Eastman
Kodak Co. Chief Executive Antonio Perez said the embattled company is
now in position to generate enough cash to survive, having suspended
its dividend and cut more jobs.
Mr. Perez said, in a meeting with
The Wall Street Journal, that there are recent signals that business
conditions are improving, but “growth won’t return until 2011.”Kodak
CEO Antonio Perez, shown in February, said customers are buying more
inkjet cartridges than expected.The camera and printer maker’s painful
plan for refocusing on digital markets was just getting traction last
year when the economic downturn hit, slamming consumer spending in the
Christmas season and squeezing credit for Kodak’s commercial-printing
customers.Kodak’s sales plunged 24% in the fourth quarter and 29% in
the first quarter. The company forecast it would lose up to $400
million from continuing operations this year. Its cash reserves fell
39% to $1.31 billion at the end of the first quarter.But Mr. Perez said
Kodak’s “cash position now is fine” and if business recovers the
company won’t have any issue with liquidity. He added that Kodak has
“plenty of options… if we think the fourth quarter will be lousy.”Although
Kodak shares are trading near all-time lows, below $3 apiece, Mr. Perez
is confident he would find investors eager to help Kodak recapitalize
and continue operations, if needed.Kodak is counting on two new
products to help it grow and return to profits starting in 2011: a
consumer inkjet printer and a very fast digital-inkjet printer for
catalogs and direct mailers.Mr. Perez said the consumer printer is
performing better than Kodak originally expected because customers are
buying about eight ink cartridges a year, double the industry
norm.Kodak designed its inkjet printers with expensive silicon
technology inside the machine, rather than on individual ink
cartridges. The change means that while Kodak’s printers, priced at
$149 to $299 each, cost 30% more than rivals such as Hewlett-Packard
Co., it can offer ink cartridges at lower prices.The company
markets its printers to people who do lots of printing and resent
paying high-prices for ink. Kodak sells ink cartridges for about $25.
List prices for competitors’ cartridges average $47 and up.Still the
company needs to expand the installed base of its printers before there
are enough buyers of the high-margin ink cartridges to bolster profits.Last
year, Kodak sold 793,000 of its All-in-One printers, less than 1% of
the world-wide market of 92 million sold, said Larry Jamieson, printer
analyst for Lyra Research, a market research firm. Kodak has said in
the past that it would eventually like to capture as much as 10% of the
market.In the commercial-printing business, the company is pushing a
new digital-inkjet printer called Stream that will start selling in
volume next year. Analysts say that the machine’s output is almost as
good as offset presses.While he remains cautious, Mr. Perez
said retailers the company deals with “believe Christmas will be much
better than last Christmas.” Kodak, which sells many of its digital
cameras in Wal-Mart Stores, specializes in low-priced, point-and-shoot
digital models.He said retailers have been telling Kodak that they
think the second quarter “is the bottom” for the economic downturn. “We
all expect the third quarter will be a little better,” he added.Ron
Glaz, an analyst with market research IDC, said unit sales of digital
cameras are likely to be down 4% to 5% world-wide this year from 138
million last year. He said the dollar decline is likely to be sharper
because “cameras are about 30% cheaper and for $100 you can get a
really good one.” -
AuthorJuly 10, 2009 at 12:22 PM
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