Kodak Weighs Bankruptcy!

Kodak management has always been a dark mistery to me. I've been looking at Great Yellow Father's 10K report for 2010, to try to get some numbers.

I get the impression of a cash strapped company that is riding a heavy debt burden and trying to turn around, while still not cutting fast enough in the divisions that make losses. They are now in the cash-strapped season (their sales are seasonally concentrated in the last four months). so it is not a surprise that Bloomberg picks rumours.

Surprisingly to me, their big loser seems to be their Graphics Communications group; this seems to be "software, media and hardware products that provide customers with a variety of solutions for prepress equipment, workflow software, analog and digital printing, and document scanning". I'd never heard from Kodak in this segment but they are the second largest division in sales, close to Digital Imaging.

The Film group turns a small profit of 64 m (about 4% of sales). Film division is going down in sales, from 2257 m in 2009 to 1767 in 2010 (-22%). They made, however, a profit of 64 m (4 $ of sales) by cutting R&D to only 19 m in 2010. That R&D spending is only 1% of sales and it makes sense for a mature industry.

Kodak got into the printers business and bought a scanner company. Makes sense as overall strategy, I'm not sure if the timing is right, however. It is a race between their turnaround strategy and the debt burden. They probably need to sell patents to get cash flow.

Kodak is getting healthy profits in their digital imaging division.