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Industry Insight

Investor firm petitions for sale or turnaround at Kodak

Investment Partners Asset Management,

By Adam Dewitz
Published: March 2, 2011

Investment Partners Asset Management, a New Jersey investment management firm, is petitioning two of the largest holders of Kodak requesting that they lead an effort to effect change at the company:

Investment Partners Asset Management (IPAM), announced today that it sent a letter to Legg Mason Capital and Fidelity Management, who combined, through accounts they each manage separately, hold approximately 24.05% of Eastman Kodak Company (NYSE: EK) according to their latest 13F filings. The letter asks these fiduciaries to recognize Kodak’s deteriorating financial condition and substantial diminution of shareholder value over the past several years, and requests that they take a leadership position in effecting change at the company.

In the letter, IPAM also points out that, despite the poor financial performance of Kodak, the value of the Chairman and CEO’s annual total compensation package has averaged approximately $6.5 million per year according to the last five filed proxy statements, and was valued at more than $9.0 million in 2007 alone. Additionally, the letter discusses Kodak’s thus-far failed multi-year transition to become a profitable digital company, and requests that Legg Mason Capital and Fidelity Management, as Kodak’s largest owners, exert their shareholder rights. Specifically, IPAM suggests these fiduciaries spearhead an effort to install turn-around specialists on Kodak’s management and board, or force Kodak to be sold to a larger concern that has resources to commercialize the company’s intellectual property more efficiently.

Accounts managed by IPAM and its affiliates own approximately 205,313 shares of Eastman Kodak, and $1.0 million face amount of Eastman Kodak’s 7% convertible bonds.

Following its annual strategy meeting last month Kodak shared plans to achieve sustainable profitability profits by 2012. Kodak's plan relies on revenue in its core growth businesses, consumer imaging and commercial printing, to double in size by the end of 2013.



By Don Harvey on Mar 03, 2011

In case no one has done ANY homework, the commercial printing market is half the size it was 10 years ago, and will continue to decline due to the digitization of the workflow. Double in size? Growth opportunity? No, try continued decline. This is a structural change, not a cyclical change.


By Manny on Mar 03, 2011

Being a customer of Kodak's for the past 15 years, it is very frustrating to see what has happened at this company. In the Kodak Polychrome days customer service was everything. You would see your sales rep once a week and there was a relationship built over years. Now I don't even know if I have a sales rep, switched my plate business to Agfa and can't recall the last time anyone from Kodak contacted me for anything. Their customer service department has been gutted.

It got so bad two years ago that I told them if they didn't hire the guy servicing out processors, I would switch suppliers. Over 1 million per year in business. The manager from Rodchester said they could not do anything to help. They lost the business.

I can't see any chance for a turn around under current management and to say they will double the size of their business! Well thats a bad Joke.


By Tom Koceja on Mar 03, 2011

Millennial social movement has to be considered in revamping the organization today. IPAM hit it on the head; bring in turn-around specialist. Relook at business strategic planning and consumer insights Brand in a convincing and relevant way, it can gain the attention and make the deference of young people today. A shared passion for a cause can foster a strong personal relationship (more advertising to this point).
Millennia’s 13 – 25 a culture of alacrity, technology and choice; they will assume responsibility for positive impact on the future.
Get them more involved, rebrand......lead the pack!


By KCB on Mar 03, 2011

While Kodak still has problems to solve to regain better financial performance, Print CEO misstated some important facts from the article. The plan states they expect consumer and commercial inkjet to double in size by the end of 2013. There is a huge difference between commercial printing and commercial inkjet applications!


By Jerry on Mar 03, 2011

How soon we forget that this is the second attempt Kodak has made to transition to a digital company. In the mid-1980's they bought Atex. At the time of the acquisition, Atex had the largest user base of editorial and advertising systems for newspapers in the world. It took Kodak less than 5 years to completely destroy Atex. History is now repeating itself. Kodak is no better positioned to manage and grow their acquisition of Creo. The talent that was once Creo is already gone and all that is left are the systems they struggle to support. All that's left are the old stoogies with their Brownie camera mentality. RIP Kodak!


By Jack on Mar 03, 2011

It's unfortunate that this has happened to Kodak. I believe that they have not been bold enough, and have chosen to keep too many declining legacy businesses (digital cameras, printing plates, etc). I think they need a leader prepared to take much more aggressive action.


By Greg Imhoff on Mar 03, 2011

Truth is turning around a 800 # Gorilla is not simple. Manny is correct as is Jerry on CREO market leaders lost.

If this is as positively reported intentions are focused on building shareholder value this strategy may work because intellectual property and people who know how to - do make a difference.

Sending leaders on their merry way from the point of view of "less is more" is clearly not real especially with in declining competitive markets. To lead Kodak needs to return to a culture of innovation and to simultaneously protect the cash flow from clients it has or had.


By Rick Lindemann on Mar 03, 2011

Manny is spot on with that assessment. We've been with Kodak/Scitex since for over 10 years and the past 2-3 have been horrible.


By Vince on Mar 03, 2011

Kodak has shown great progress in the area of high speed ink jet technology. Their inkjet heads run in the transactional space and are second to none. I haven't seen their new Prosper Press run but have also heard amazing reports on this technology. I think the issue is that so many analysts don't look at all divisions of Kodak. Antiquated thinking from many of them. I invest and therefore research, and if they can make some of these new products click it could be very good for Kodak. - Waiting to see.


By Vytas Barsauskas on Mar 03, 2011

I have to agree with IPAM that there is a need to infuse “turn around” decisiveness at Kodak. They are a high market share player in some product segments, a strong brand name and they are a resource rich $7 Billion technology company. Its not that complicated. Tough decisions have to be made of where they want to go and to implement corrective action. All plate manufactures are envious of Kodak’s CtP portfolio, they are the best in the world, they just have to manage their business profitably. Lots of the comments here I agree and disagree. Markets in Asia and Latin America are growing, there are product portfolio diversification opportunities, there are digital printing opportunities, there are many profitable ways Kodak can grow their graphics business. On the service statement, I fully agree that USA service has declined dramatically in the last 10 years but the market has repeatedly shown that it is not willing to pay for service. You know that any proposal that offers a price with and without service, the lower priced “without service” proposal will be accepted almost all of the time. It is a tough market but this is not just a print industry challenge.


By Neil McEachren on Mar 03, 2011

As an old proud Eastman Kodak employee, a long time Kodak employee's son, an ex Creoite, and 36 year veteran in the printing industry, I have to say that Kodak has stagnated and delivered the killing blow to almost every business they've aquired for the last few decades. The Company direction is ? has been the question for quite some time and still not answered.

The proud Eastman Kodak Company that I knew growing up isn't what is was, nor will it ever be. (see buildings being imploded in Rochester)

Relying on commercial and transactional print to turn around their balance sheet is a far fetched dream. A much larger right sizing will have to be done. What ever happened to Kodak's consumer based revenue stream that kept them afloat and at top of mind in the marketplace? They gave up the golden goose so easily!

High volume transactional print will decrease as printing/mailing costs and the push for on-line consumer transactions/interactions increase. Green marketing initiatives from the banks and utilities continue to reduce printing and postal costs and will spell an end to high volume transactional mailings over the next decade.

Commercial printers struggle each day and Kodak has very few answers to provide to the average printer, outside of coddling Consolidated Graphics and Donnelly National accounts. The Kodak portfolio is a non player in 90% of the existing print market. My client/prospect feedback of late has been that they print 70% digital to 30% offset now and in most states 90% of the printers are less than 15 employees. Multi Million dollar inkjet printers are needed by only a few, but are marketed to the masses by Kodak.

It reminds me of a joke that Dan Gelbart at Creo had said many years ago, that I am now embellishing:

Question: What's the difference between a used car salesman and most Graphic Arts Manufacturers Sales/Marketing Departments?
Answer: At least a used car salesman knows when he is lying to you".


By Linda Hale on Mar 04, 2011

Kodak requires a visionary leadership that understands who they can be in the future. Every product they have ever sold and company they have acquired, successful or not are lessons for the future.

I agree with Neil, focusing on affordable solutions for the masses of 10-19 employee companies world wide instead of focusing on the few would serve them well.

Use the Kodak Next Press as an example. Look at how poor the sales of these units are comparing to other units, that are not that spectacular. Making the technology available and affordable for more will create more demand for the unique applications. Anybody can do the usual run of the mill work. Kodak has a unique application that is a real winner. It's the delivery that is off. Price is everything!


By Carol on Mar 05, 2011

As a former Kodak sales representative of 8 years who actually cared about the over all well being of the company, I can’t even begin to describe how disappointed I was after my hiring. I was shocked at the level of expertise of management, or lack there of. It was very clear to me that nepotism was alive and well within Kodak which in my humble opinion contributed to Kodak’s sharp decline. There was and old saying “if you work hard…if you actually meet or exceed your sales goal …you will be fired.” No one cared, there was no “heart” within management. Just a bunch of “old boys” trying to protect each other and survive as long as possible. There was so much talent at Kodak during my employment, but that talent was never given a chance to thrive due to the poor management, and management jogging for position. Kodak certainly could recover despite the decline in the printing industry. All the business that was lost due to the lack of due diligence could be recovered with a correction of leadership and a restoration of “Heart”. It’s all about leadership, service, creativity and innovation. Where are their new products? Products that enter the homes of the masses. Come on your Kodak! Perhaps you should consider hiring talent with “heart” as you move forward.


By Jim on Mar 05, 2011

I was at Polychrome when Kodak took over changing us to Kodak-Polychrome. The arrogance of many of the Kodak managers and the general attitude towards the exceptional talent at Polychrome caused many of us to leave while others were squeezed out or out maneuvered by Kodak politics. Never was a positive customer attitude or heart. Very sad that it continues to this day.


By QIS Print NYC on Mar 08, 2011

We are about to lease a NexPress - just a little worried about Kodak...


By Brian on Mar 11, 2011

I can't tell you misguided management is at Kodak. I'm a former sales rep and to see the companny disintegrate so rapidly is mind boggling to me.Kodak can't produce product on time and when they do, as a sales rep, you almost wish they hadn't. It is ashame.


By John Henry on Mar 15, 2011

I thought social media kodak was the leader in and was transforming the company. I guess marketing hype once again does not translate to the bottom line.

The nexpress line is overpriced with the new lower cost units via KM, Ricoh and Canon. The line is tired and a major shift is a float that it may not compete well in as costs drop and revenue for kodak declines in that line.

Yes it makes sence in some cases but the segment is so small and getting tougher by the day.


By Gordon Pritchard on Mar 18, 2011

(I was a Creo employee for 8 years then a Kodak employee for 3 years (at which point I was laid off along with the engineering teams I worked with in color, CtP, and customer services)

In all fairness, Kodak's management structure is very much top down. Very different from Creo's which was very flat. IMHO, companies that are structured like Kodak require very charismatic, and visionary, leadership in order to succeed. They also attract and hire the type of employee that is happy with being told what to do and how and when to do it. Creo, on the other hand attracted and hired employees that were self starters, independent, and for the most part did not need or want to be managed. At Creo, every employee had direct access to the CEO. At Kodak, in my experience, you had direct access to your manager but not any higher up the ladder. I, and other employees, knew Amos and Dan well. They ate in the cafeteria with the rest of the employees. I only saw Antonio once at a tradeshow.

I think that Creo's rise from zero graphic arts presence in 1996 to being the largest vendor by 2001 was in great part to the flat management style it fostered and the passion for the business it encouraged in the employees. It also made for a very nimble and entrepreneurial organization where employees felt very much personally responsible for the success of the company as a whole. That sense of commitment resonated with customers who often paid a premium to purchase its products and services.

Quite different from Kodak's operational style. When Kodak acquired Creo in 2005, Jeff Jacobson came to Vancouver to introduce Kodak to a gathering of employees. Amos introduced Jeff and spoke about how one of the reasons Creo got into trouble was because top management stopped listening to its employees and instead began isolating top management from the rest of the company. Jeff listened polity and said that he always had an ear for his managers and couldn't understand why he should listen to the employees directly.

Both management styles can lead to success. But both require an appropriate, but different, management group to make it work. Creo's management group lost its way. I fear that Kodak's has yet to find its way.


By Andy on Mar 24, 2011

To paraphrase Michael Corleone in The Godfather, Pt II:

"Kodak has been dying from the same heart attack for the last twenty years"

The decline of Kodak was started well before merging KPG back under its wing, well before Creo even existed. And well before the digitization of the printing industry, the dotcom bubble, web 2.0 and everything else contributing to the massive decline in the number of printers in the U.S. in the last decade.


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