Kodak Click for Bankruptcy
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Case Code: BSTR416 Case Length: 31 Pages Period: 2003-2012 Pub Date: 2012 Teaching Note: Not Available |
Price: Rs.500 Organization: Eastman Kodak Company Industry: Consumer Electronics Countries: Unites States Themes: Bankruptcy |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Realignment Strategy
In the same year (2003), Kodak unveiled its digital-oriented growth strategy. It believed that its sales would touch US$16 billion and US$20 billion by 2006 and 2010 respectively. Carp said, "We are acting with the knowledge that demand for traditional products is declining, especially in the developed markets. Given this reality, we are moving fast - as digital markets demand - to transform our business portfolio, with an emphasis on digital commercial markets. The digital world is full of opportunity for Kodak, and we intend to lead it, as we have led innovation in the imaging industry for more than a century."...
Losing the Competition
In April 2009, the company declared that it would defer the payment of future cash dividends on common stock. Accordingly, it did not pay any divided in 2009-2011. At the end of 2009, the company reported losses of US$210 million on a sale of US$7.6 billion. Chris Whitmore, Analyst, Deutsche Bank , said Kodak's digital-camera sales were deteriorating not only because of competition from smartphones and video cameras, but also because the company's cameras were perceived as being inferior to rivals from companies such as Sony and Canon. Kodak also did not have a camera in the high-end single-lens-reflex market...
Key Issues Leading to Fall of Kodak
Strickland said, "We developed the world's first consumer digital camera and Kodak could have launched it in 1992. We could not get approval to launch or sell it because of fear of the cannibalisation of film." He added, "The problem Kodak had been the business model. It couldn't figure out the business model in digital space. They produced the same return that investors expected based on its stone history." However, in the declaration submitted to the Bankruptcy Court, Kodak said that poor market conditions since 2008, legacy retirement benefits costs, a sharp fall in its traditional business, the slow growth in the digital cash generating business, the slow cash flow from sale and licensing of intellectual property, the negative publicity at the end of 2011, etc. ...
Looking Ahead
According to company sources, the company aimed at coming out of Chapter 11 by 2013. However, some analysts expressed doubts on whether the company could achieve this and suggested instead that it should liquidate itself like Nortel Networks Corp., which had also fallen behind the technology curve. Nortel had decided to liquidate itself in the Bankruptcy Court rather than reorganize and had raised more than the expected US$4.5 billion for its patent trove...
Exhibits
Exhibit I: Five Years Consolidated Statement of Operations of Kodak
Exhibit II: Five Years Consolidated Statement of Financial Position of Kodak
Exhibit III: Five Years Consolidated Statement of Cash Flows Of Kodak
Exhibit IV: Five Years of Stock Price Movement of Kodak's Stock
Exhibit V(A): Consolidated List of 50 Largest Unsecured Claims (Excluding Insiders) as of November 21, 2011
Exhibit V(B): Consolidated List of Holders of 5 Largest Secured Claims as of November 28, 2011
Exhibit VI: Cash and cash equivalents at Kodak between 1991-2011 (in US$ million)
Exhibit VII: Worldwide Kodak's Employees between 1991 and 2011
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