Analysis Kodak
Eastman Kodak: Picture Not So Perfect
Article: “For Kodak, New Risks in Auction of Patents”
By: Dana Mattioli
Background: The Ups and Downs
For the last 100 years, Eastman Kodak thrived as an innovator in the photography arena specializing in graphic communications, photofinishing, and digital imaging (Spector). As an industry leader, Kodak was very profitable with a net profit of $2.5 billion in 1999 and has often been cited as being the “Google” of its day (Economist, “The Last Kodak Moment?”). A large part of Kodak’s success was founded on their internally created patents. To generate revenue, Kodak licensed these patents to other companies giving them access to the technology.
However within the last twenty years, Kodak has been losing ground primarily because of their failure to successfully adapt to the new market of smartphones, cameras and digital photography (Spector). Problems in the last several years have worsened and since 2004 Kodak has only reported one profitable year (De La Merced). An article by the Economist exemplifies Kodak’s decline; “Eastman Kodak built one of the first digital cameras in 1975. That technology, followed by the development of smartphones that double as cameras, has battered Kodak 's old film and camera-making business almost to death.” (Economist, “The Last Kodak Moment?”). A major sign of trouble occurred in September 2011 when Kodak borrowed $160 million from its line of credit, which lead to a quick decline in stock values (Spector). In the past, Kodak was able to rely heavily on selling profitable patent licenses; however, these patents are no longer generating the same level of revenue. The Wall Street Journal suggests that this could be due to the “heavy” amount of licensing on their patents (Mattioli, “For Kodak, New Risks in Auction of Patents). Kodak’s inability to adapt and overspending on research and development has put them in the predicament in which they now stand.
Chapter 11
Article: “For Kodak, New Risks in Auction of Patents”
By: Dana Mattioli
Background: The Ups and Downs
For the last 100 years, Eastman Kodak thrived as an innovator in the photography arena specializing in graphic communications, photofinishing, and digital imaging (Spector). As an industry leader, Kodak was very profitable with a net profit of $2.5 billion in 1999 and has often been cited as being the “Google” of its day (Economist, “The Last Kodak Moment?”). A large part of Kodak’s success was founded on their internally created patents. To generate revenue, Kodak licensed these patents to other companies giving them access to the technology.
However within the last twenty years, Kodak has been losing ground primarily because of their failure to successfully adapt to the new market of smartphones, cameras and digital photography (Spector). Problems in the last several years have worsened and since 2004 Kodak has only reported one profitable year (De La Merced). An article by the Economist exemplifies Kodak’s decline; “Eastman Kodak built one of the first digital cameras in 1975. That technology, followed by the development of smartphones that double as cameras, has battered Kodak 's old film and camera-making business almost to death.” (Economist, “The Last Kodak Moment?”). A major sign of trouble occurred in September 2011 when Kodak borrowed $160 million from its line of credit, which lead to a quick decline in stock values (Spector). In the past, Kodak was able to rely heavily on selling profitable patent licenses; however, these patents are no longer generating the same level of revenue. The Wall Street Journal suggests that this could be due to the “heavy” amount of licensing on their patents (Mattioli, “For Kodak, New Risks in Auction of Patents). Kodak’s inability to adapt and overspending on research and development has put them in the predicament in which they now stand.
Chapter 11
Cited: "Information about Kodak 's Reorganization." Kodak: Chapter 11 Reorganization. Kodak, n.d. Web. 26 Sept. 2012. <http://www.kodak.com/ek/US/en/Kodak_Transforms/Home.htm>. "Intangible Assets." Accounting Principles I "Intangible Assets." Accounting Principles I: Intangible Assets. Cliff Notes, n.d. Web. 26 Sept. 2012. <http://www.cliffsnotes.com/study_guide/Intangible-Assets.topicArticleId-21081,articleId-21080.html>. "The Last Kodak Moment?" The Economist Mattioli, Dana. "For Kodak, New Risks In Auction Of Patents." The Wall Street Journal 22 July 2012: n. pag. The Wall Street Journal. 22 July 2012. Web. 22 Sept. 2012. <http://online.wsj.com/article/SB10000872396390443295404577543212452303718.html>.