Kodak's Desktop Inkjet Business Up in The Air

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Kodak’s Desktop Inkjet Business Up in The Air

May not be part of company’s future
Inkjet ink began flowing in Eastman Kodak’s veins in 2003, when company President Antonio M. Perez — who had been a key figure in Hewlett-Packard getting into the industry — saw that Kodak had unique technology that could make a big splash in the field.

Four years later, with Perez now the CEO, Kodak cannonballed into the home inkjet printer market, unveiling its desktop printers at a media event in the same NBC studios used by Saturday Night Live and quickly getting its EasyShare 5100 on shelves at Walmart stores nationwide.

Ever since then, Perez has repeatedly pointed to desktop inkjet printing as a big part of Kodak’s future. While previously declared “core” businesses such as film evaporated, the company kept insisting desktop inkjet would be part of the new core, along with commercial printing, packaging printing and print-related software and services.

Except now, suddenly, desktop inkjet printing isn’t part of Kodak’s starting lineup.

In announcing on Thursday plans to sell a batch of operations including its still camera film business, Kodak also specified a new lineup of core businesses. Commercial and packaging printing, print software and services were still there, along with “functional printing” — or the use of printing as a means of manufacturing. According to Kodak, potential applications include printed electronics and biotechnology.

Desktop inkjet printing, meanwhile, was placed alongside specialty chemicals and motion picture film as businesses the company would continue “to own and operate.”

When asked why desktop inkjet is no longer considered a core business, Kodak spokesman Christopher Veronda said it “is now at a different product life cycle stage.”

“We have successfully built a significant installed base that is generating strong ink revenue,” he said. “The business has enjoyed several profitable months and is expected to generate cash in 2013.”

The company didn’t directly answer when asked if it plans to sell the desktop inkjet business.

Desktop inkjet printing is one of the few areas left where Kodak deals with individual consumers. The company earlier this year sold the Kodak Gallery business, is closing down its digital camera business, and is in the process of selling its photo kiosk and event imaging businesses.

While consumers once accounted for 90 percent of Kodak’s sales, today the company makes most of its money selling to other businesses, Perez said in Thursday’s conference call with reporters.

Though Kodak has de-emphasized the desktop inkjet business, it likely won’t sell it anytime soon, said Charles LeCompte, a senior analyst with Photizo Group, an imaging industry research firm.

“I think Perez is pretty wedded to consumer inkjet,” LeCompte said. “My guess is that’s one of the last things they divest.”

Kodak’s de-emphasis comes as the home/small office printer world is in decline. Overall, printing in the U.S. has dropped from 30 billion copies a decade ago to 15 billion, according to Info Trends.

Lexmark International plans to quit selling inkjet printers for small offices and home offices through retail outlets because of declining sales. And Hewlett-Packard Co. earlier this week said one drag on its second-quarter revenue was a 23 percent year-over-year decline in consumer printer sales.

Kodak projects $331 million in inkjet printer revenue this year, down about 9 percent from 2011. But unlike 2011, which saw a gross loss of $81 million, Kodak expects a gross profit this year of $48 million.

The company spent hundreds of millions of dollars on creating the consumer inkjet line, which makes money not so much on selling printers as on ink sales. But the company’s timing was lousy. According to paperwork filed in U.S. Bankruptcy Court, Kodak said the 2007-09 recession hurt growth and resulted in lower prices

http://pdnonline.com/news/Kodak-to-Sell-Film-a-6452.shtml
Kodak to Sell Film and Photo Paper Business
 Eastman Kodak plans to sell off  its film and photographic paper businesses in an effort to emerge from bankruptcy, the Wall Street Journal reports. In an announcement late yesterday, Kodak chief executive officer Antonio Perez said the company is seeking buyers for its film and photo paper business and its digital image processing kiosks and scanners. The company plans instead to focus on inkjet printing, Perez said Thursday.

Kodak posted a statement about the plan on its web site. Among the businesses Kodak will keep, the statement says, are "Consumer inkjet, Entertaining Imaging, Commercial Film and Specialty Chemical businesses." Kodak’s "commercial film" business refers to products for government and industrial use such as aerial photography and surveillance.

Perez said the company wants to complete the sale by the first half of 2013, when the company hopes to emerge from bankruptcy. Kodak sought bankruptcy protection in January 2012. Once the leading manufacturer of film, the company has struggled after failing to keep up with digital imaging innovation, and the popularity of digital cameras diminished demand for film and photographic paper.

Perez declined to say how much Kodak hoped to net from the sales of its film, paper and other businesses. Also unclear is who might buy these businesses.

When Kodak filed for bankruptcy, the company said it planned to raise money by selling off roughly 1,000 patents, primarily in digital imaging, but Businessweek reports that negotiations for the sale of the patents has dragged on. According to Businessweek, 20 companies have signed non-disclosure agreements to review the patent portfolio, and is having "continuing discussions with bidders," according to Perez. “Our patent auction continues, and we are still engaged in discussions around the potential sale of our digital imaging portfolio.” The original deadline for the auction was August 13; that deadline has been extended while discussions with potential bidders continues.

In the professional film market, Kodak’s U.S. professional film revenues rose 20 percent in 2011. However, as demand for consumer and motion picture film continued to decline worldwide, the company faced challenges taking advantage of economies of scale. Earlier this year, Scott DiSabato, who was Kodak’s U.S. marketing manager for professional film, told PDN that Kodak’s factories and distribution facilities “were built decades ago for a much bigger traditional photographic market." DiSabato added at the time that though positive signs in the U.S. pro film market were promising,  “It’s going to be hard to ever justify the investment necessary to right-size this when [the overall film market] is declining."

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August 28, 2012 at 9:05 AM