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Troubles Mount For Eastman Kodak; May Not Make One More Year

Source: kodak.com media downloads

Eastman Kodak is projected to post a $600 million dollar loss for 2011 and 2012 doesn’t look much better.  The once perennial camera company is fighting for it’s economic life and experts predict it won’t make it another year.

The company said last week it may have to take on more debt or sell a large chunk of its patents in order to survive the next 12 months. Kodak also cut its cash outlook and said operational losses have mounted to $400 million to $600 million for this year. Previously, the company estimated losses at $200 million to $400 million.

Someone who was quick to cast a verdict might blame the switch-over to digital cameras as the reason for Kodak’s faltering business model;  But that’s not exactly accurate.

The great irony with Kodak is that it was on board with digital camera technology before just about anyone else. One of the company’s engineers, Steve Sasson, is credited with having invented one of the first digital cameras in the 1970s. Sasson’s 8-pound camera had a resolution of .01 megapixels.

But Kodak was reluctant to push digital technology, worried it would eat into the traditional film business that was its cash machine. The company wouldn’t begin selling mass-market digital cameras until 2001, the The Associated Press reports.

Kodak was too slow to react, and that pattern would hurt the company time and time again.

At least Kodak was smart enough to do one thing: build up more than 1,000 digital-imaging patents.

So what happened?

Digital cameras didn’t have the profit margins that film did.

And so Kodak embarked on a technology crusade, offering everything from the super-fast scanning service called Scan the World to online photo-sharing tools like EasyShare. The company’s chief executive, Antonio Perez, was optimistic: “In two to three years, this will be seen as one of the most successful transformations in the history of our country,” he told BusinessWeek in 2006.

But Kodak again missed the boat. The prices of digital cameras would continue to drop to the point where profit was almost nonexistent. And the digital-photo services Kodak invested in were lost in a crowded field of innovation.

“They lost their magic touch,” a Morningstar analyst said about the company in 2007. “There are way too may people producing similar technology better.”

At the same time, consumers have migrated towards “smart phones” that include camera technology that side-steps Kodak.

 

Kodak fights for survival- MSN Money.

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