Dear Kodak

Discussion in 'Kodak' started by Alan Browne, Jul 25, 2003.

  1. Alan Browne

    Alan Browne Guest

    Ms. Standish, please CC to the Directors and Divisional VP's named
    below. Rgds, Alan Browne.

    Dear Messrs. Carp, Braddock, Bradley, Brust, Coyne, Kerpelman,
    Marchetto, Masson and Gustin.

    Since 1998 your stock price has fallen nearly 3 fold, losing enormous
    shareholder equity. All long term strategies that you had have been
    proven as invalid. You have shot gunned and diluted rather than aim
    bullets and hit targets. Fuji have stolen (yes stolen, 'cause ya let
    'em do it to you) huge market share from you over the last 20 years.

    Break up the company.
    =====================

    Currently you state that the company is aligned so:

    -Photography (traditional & digital) photography (still and motion)
    -Health (traditional & digital) photography
    -Commercial imaging (capture/output/storage) for commercial/government
    customers
    -Displays.

    This seems like a good market oriented structure. But it is killing
    Kodak. The internal stress of having "traditional" v. digital is a
    culture clash of the highest order. The film group is lost and
    continually losing market share to Fuji and others. The marketing chain
    doesn't know what to focus on. Here's the kicker: your CUSTOMERS do not
    understand nor trust you anymore. Your market share in poor countries
    may be growing, but, hey, they're poor, there's only so much they can
    heave over the counter over time ... and now that you've opened those
    markets, watch Fuji rush in and kick you down again. In any case, these
    customers will catch up and begin going digital too.

    The perception of film users is Kodak don't care, they're going digital.
    The perception of digital imagers is Kodak are really film makers and
    digital wannabes.

    A fine kettle of fish where most of your customers believe you are weak
    in the customers area of interest.

    Split up the company as follows.

    1) Eastman Kodak Films: Film, paper, chemicals, mini-labs and
    processing. This company will retain and operate all the assets related
    to the above and FOCUS on stable, profitable traditional film
    excellence. This company will start with 0 cash on hand, using legacy
    assets and employees to generate revenue and profits by REDUCING the
    number of products to ranges that are easily understood, unchanging over
    time (except for product improvements that technology may provide) and
    targeted for consumers and professionals in the photography, medical and
    commercial markets. This company will focus on meeting customer needs
    and requirements and produce to the highest standards of quality. The
    company will benefit from Kodak's existing marketing and sales channels
    and BE THE FILM COMPANY of the 21st century.

    2) Kodak Image: digital capture, storage, printing, processing, printer
    paper. This company will, using $560M or so of cash on hand and
    existing assets for digital technology, will FOCUS and be the technology
    leader in digital imaging for photography, medical, commercial and
    displays. This company will be daring and innovative and will
    aggressively persue market share in electronic imaging. This company
    will need to develop and establish a new and seperate marketing and
    sales network.

    Stockholders will receive proportional shares in each company in
    exchange for their current stocks according to the value split in
    creating the two companies from existing company.

    Customers of both companies (and many customers will be customers of
    both companies) will retain the identification to the Kodak brand, while
    having a clear source of excellence for their technical needs without
    confusion as to the motive of the source.

    I wish you well.

    Regards,
    Alan Browne
     
    Alan Browne, Jul 25, 2003
    #1
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  2. Sorry Alan, I disagree. The photo industry is changing fast. It is
    composed of a mix of traditional and digital products today including many
    products that serve both customers. Who knows how this will play out over
    the next 5 - 20 years.

    I believe that a united Kodak would be in a better position to move with
    and to be a force in the changes that are to come.

    However everyone is entitled to their opinion, even me.
     
    Joseph Meehan, Jul 25, 2003
    #2
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  3. If that mix of traditional and digital products results in Kodak killing
    the film and paper products that I like then they can keep it.

    There is a good chance that I will be 'Kodak free' in the next 5 - 20 years.



    Philip Homburg
     
    Philip Homburg, Jul 25, 2003
    #3
  4. Philip Homburg

    Well, Despite not knowing what tomorrow will bring I use Kodak film. I like
    it, and that's what counts. I also like and use others, Ilford, Maco, and
    even the lowly Konica is useful.
     
    John Garrison, Jul 25, 2003
    #4
  5. Alan Browne

    Alan Browne Guest

    Indeed you are. I just hope that you're not a Kodak shareholder, 'cause
    that's where the metal meets the meat. If you invested $1,000 in Kodak
    in 1998, it is now worth $380 in 1987 $'s.
    (Last split was in '87). Kodak's Directors are guiding the company the
    wrong way.

    What I propose (and it isn't really original) maintains the Kodak brand
    (a huge goodwill asset) for both new companies, while allowing the
    legacy company to "milk" that market profitably to the benefit of
    shareholders and customers, and in the new company develop unfettered by
    old habits.

    Many large companies become unwieldly because of their imense size and
    markets that begin to split in direction. You can unify the direction
    by labeling it "imaging", making it broad and diluted, or you can create
    two whole directions and let them loose to be excellent in their
    directions. Opinions may differ, and in my opinion (and others) big-K
    should persue both without confusing themselves and their customers.
    The best way to do this is to split up operations into pillars of
    strength.

    An example is Palm Corporation splitting from 3M. 3M stock has grown
    20%+ in value since the split, where Palm has fallen 80%. One pillar
    stands, the other pillar has fallen. Without the split, the Palm
    operations would have weakened 3M as a whole.

    See:
    http://www.shareholdervalue.com/shareholder_value_research/vbm_publications/split-ups.pdf

    For a very interesting article that illustrates the value of
    "deintegrating proactively". Kodak reactively split off Eastman
    Chemicals which in turn remained falt afterwards, and Kodak itslef
    continued to fall.

    Kodak needs to PRO-ACTIVELY De-integrate to make the value of the
    company in both traditional film and emerging digital to perform.

    (Interstingly, Eastman Chemicals has already split into two companies
    since it split from Kodak... although both new companies are "chemical"
    one (Voridian) is more narrowly focused on its plastic-fibres customers
    that the new Eastman with a broader product base.)

    You mention the 5 - 20 year uncertainty, and splitting up is the best
    way to ensure at least one succesful company out of two instead of the
    risk of one big death. ...I think over 20 years BOTH companies could grow.

    Yes, there will be overlapping areas, esp. in the scanning, storage and
    printing side. This can be managed through licencing between the companies.

    Cheers,
    Alan.
     
    Alan Browne, Jul 25, 2003
    #5
  6. Alan Browne

    Mike Marty Guest

    Well, Despite not knowing what tomorrow will bring I use Kodak film. I like
    I think lots of people use Kodak. I think the "Fujists" are just more
    vocal. Kind of like Linux and Mac users. Very vocal about how it is so
    superior to Windows. :)

    Only 35mm Kodak product that has disappointed me so far is VC400
     
    Mike Marty, Jul 25, 2003
    #6
  7. The loyal user base did not prevent Kodak from dropping Supra 100.
    In the USA they don't sell Supra 200, leaving Portra 160NC as the only
    decent print film under ISO 400.



    Philip Homburg
     
    Philip Homburg, Jul 25, 2003
    #7
  8. ;-) It isn't that Linux is so superior, it's that windows sucks so bad :)



    --
    -Keith

    Registered Linux user #273320

    http://counter.li.org
     
    Rusty Shakleford, Jul 25, 2003
    #8
  9. Hmm....I like that one myself.....although I like the 160 version better.
     
    John Garrison, Jul 25, 2003
    #9
  10. Alan Browne

    Alan Browne Guest

    Hi Ken,

    I neglected to mention you as an inspirational source in what I wrote.
    I read your post yesterday and started writing a variant. Then I dumped
    it as I was tired and began rambling, and started afresh this morning.
    As I just saw your post appear a moment ago (videotron are sloppy at
    updates) it reminded me of who/what got me going. So I apologize. In
    any case the same thoughts have been running through my fevered
    (lunatic? who me? I'm completely sane I tell you!) mind for many-many
    months.

    Actually I resent the 'classic' connotation. The 'classic' thing for
    large corpos to do is stick in one piece for too long!

    Cheers,
    Alan
     
    Alan Browne, Jul 26, 2003
    #10
  11. Alan Browne

    PSsquare Guest

    Alan,

    Respect your opinion, but it has more appeared to me that the root cause of
    Kodak's downfall is not organizational structure but the executive arrogance
    bred of too many years of dominant market position. It seems to be a
    playing out of the seven deadly sins. I am less than 2 hours from Rochester
    and recall the annual Kodak bonus craziness of several decades ago. Their
    hugh profit margins invited the sort of competition that Fuji mounted.
    Employees received such large bonus payments that they would buy a new car
    with it. Wow!

    No person or company changes until they reach an unacceptable level of pain,
    and Kodak top management has a very high tolerance to pain. Their only hope
    may be for a new generation of management that never knew the salad days
    prior to 1985 or so.

    I also believe that the Fuji vs. Kodak competition has been to the great
    benefit of photographers. A lot of good advances have come out of their
    rivalry.

    Regards,

    PSsquare
     
    PSsquare, Jul 26, 2003
    #11
  12. Alan Browne

    Annika1980 Guest

    From: Alan Browne
    Is this your justification for the proposed breakup? I don't think it is a
    matter of the customer being confused about which direction Kodak is heading.
    Most customers never give it a thought. They simply want superior products,
    and they aren't getting them.

    As you say, the film group is lost. Fuji is kicking Kodak's butt with the films
    so Kodak should sell off their film stuff to Fuji and concentrate on the
    digital end of things where Fuji is out-pacing them as well.

    Their latest digital camera offering (DCS-14n) is a joke, but nobody's
    laughing.
    Kodak does have at least one excellent digital printer (ML-500) and I think
    they should be concentrating their efforts there.
    If Kodak could get the price down under $1000 for true photographic output,
    they'd sell all they could make (kinda like Canon did with the D60).
     
    Annika1980, Jul 26, 2003
    #12
  13. Alan Browne

    Annika1980 Guest

    Dear Kodak,

    Film is dead. Get over it.

    Love,
    Annika -----> Totally Digital !!!
     
    Annika1980, Jul 26, 2003
    #13
  14. Alan Browne

    ThomasH Guest

    Haha, Fuji was working hard and delivered quality in E6 area.
    They also have recognized the durability problems and delivered
    materials which were tested most durable of all E6 materials in
    Wilhemls reports.

    Thomas
     
    ThomasH, Jul 26, 2003
    #14
  15. Alan Browne

    Jeremy Guest

    x-no-archive: yes

    The Japanese did the same thing to the American automobile industry. They
    built a better mousetrap while the auto executives were napping.

    They also received massive government subsidies from Japan to help them win
    the technology war. I suspect that Fuji may have been on the receiving end
    of some of that as well.

    I don't wish to defend Kodak's mistakes, but this scenario of foreign
    companies coming into our markets (while denying equal access for American
    firms to compete in THEIR markets), coupled with assistance from their home
    governments, in the form of tax write-offs and outright grants, is one that
    we have witnessed too many times.

    Perhaps if our government officials had been aggressive in opening foreign
    markets Kodak might not be in quite so deeply today. Once the Japanese set
    their sights on an industry in which to enter, there seems to be no stopping
    them.

    I wish Kodak well, because were it not for them there is no telling whether
    amateur photography would ever have become so popular in America. It is
    relatively easy for Fuji to waltz into America after Kodak built up the
    photo industry here. The fact that Fuji has had so much success is not
    necessarily because they were so much better. They might have had a little
    help from aggressive Japanese trade officials, coupled with inept American
    trade policies.
     
    Jeremy, Jul 26, 2003
    #15
  16. Alan Browne

    Frank Pittel Guest

    : Dear Kodak,

    : Film is dead. Get over it.

    : Love,
    : Annika -----> Totally Digital !!!

    and still hasn't been able to find any of the digital newsgroups.

    --




    Keep working millions on welfare depend on you
     
    Frank Pittel, Jul 26, 2003
    #16
  17. The rub there is that Kodak, last I knew, didn't actually make their
    printers, Lexmark did.
     
    Skip Middleton, Jul 26, 2003
    #17
  18. Alan Browne

    mike II Guest

     
    mike II, Jul 26, 2003
    #18
  19. Alan Browne

    Lewis Lang Guest

    Subject: Re: Dear Kodak
    If you are talkingabout slide films that is simply untrue, Thomas. Fuji (E-6)
    slide film is rated for dark storage @ about 40 years while the Ektachromes
    (also E-6) go for about a hundred years or so.

    Lewis

    Check out my photos at "LEWISVISION":

    http://members.aol.com/Lewisvisn/home.htm

    Remove "nospam" to reply
     
    Lewis Lang, Jul 26, 2003
    #19
  20. Alan Browne

    T P Guest


    A pity for Rochester that these advances seem to come in green boxes.
     
    T P, Jul 26, 2003
    #20
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