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Kodak’s Bet on its Printers Fails to Quell the Doubters
NEW YORK: At least Eastman Kodak didn’t pin its latest turnaround effort on the fax machine. Just the same, as one securities analyst said, Wall Street worries that the once pre-eminent film company is jumping "from one buggy whip business to another."Antonio M Perez, Kodak’s chief executive, has poured hundreds of millions of dollars into transforming Kodak into a giant in the inkjet printer business, even as printouts are increasingly being replaced with electronic copies on computers, tablets and smartphones."You will see that that business is going to be a gorgeous business for this company," Perez told analysts in July.While it is difficult to know whether Perez’s strategy will succeed, two things are certain: Kodak is burning through a lot of cash to pursue it; and many investors are highly skeptical.
Consumer inkjet revenue at Kodak grew 48% in the second quarter, but since the first of the year, Kodak shares have lost about three-quarters of their value.And in recent weeks, rumours about the company going bankrupt are rife.The stock fell 2.4% to close at $1.24 on Thursday.Perez, who was named the chief executive in 2005, declined to comment for this article, citing the quiet period before the next earnings are announced on November 3.
Company officials deny that Kodak is considering a bankruptcy filing.
A Kodak spokesman said that Perez had pursued inkjet printers because the company had "a treasure trove" of inkjet technology in its research and development unit and that the business is "well positioned for ongoing success." "Our corporate strategy is focused on core strengths at the intersection of materials science and digital imaging science," Christopher Veronda, the spokesman, said in an email."This is squarely in that arena." In addition, Kodak officials said that inkjet printers were just part of a turnaround strategy that also included a focus on commercial printing, packaging and workplace software.Critics of Kodak’s direction are impatient.
Gregg Abella, a co-principal at Investment Partners Asset Management, said he was tired of hearing Perez say the company would turn around in a year or two.And he questioned why the Kodak board had not been more assertive in steering Perez on a different course."How on earth did the board listen to this guy for the past six years and not do anything about it?" Abella said.
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