Eastman Kodak Financial

Eastman Kodak is a 131-year old company lost much of its film business to foreign competitors, then mishandled the transition to digital cameras. Now it is quickly burning through its cash as it remakes itself into a company that sells printers and ink. Former executive who recently left the division says Kodak overestimated its ability to penetrate the printer market and there are doubts internally about whether the 2011 target can be met. Mounting competition has pushed down printer prices, raising another hurdle to profitability.

The Kodak company current main source of income is intellectual property revenue, 3% of printers globally in market, ink sales, and cash generated by asset disposals. Company's heavy cash burn is due to the pension-plan contributions, underlying problems with the business, and settlements. The stock price has taken a deep sink that the numbers bottomed below the value in 1950's. CEO Mr. Perez is coming from HP who understands the market in printers and the board is supporting him with full confidence that there will be a U-turn for Kodak in its businesses. As it is stated that restructuring film alone cost $3.4 billion over four years and the company doesn't generate enough cash to cover all the expenses. Though a current patent suit might bring in a $1 billion from Apple & RIM which might float the company a little longer but the company need to focus more on gaining the market share in high-speed digital printing, new product lines in digital cameras, and, offering service plans for printers, to generate the cash required to support the company by itself and manage pension, health care costs. Similar example in a different product line but with high health care costs, foreign competition, and obtained floating cash from the government is General Motors which had to emerge out of bankruptcy to post profits. If a quick turn around by Kodak is not possible then it is quite possible that a company like Google that is focused on information technology may come forward to buy the company with its intellectual property to support Google's vision in purchasing Motorola.