Dear Kodak

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

  1. Alan Browne

    Alan Browne Guest

    "defray and delay" is not the right way to manage a declining market (if
    it is indeed declining, jury's out). Declining markets need their own
    strategies to maintain, if not increase market share, and maximize
    profits which are either paid back to the investors or used to invest in
    new market areas. (This is essentially Kodak's current model, but badly
    implemented, IMHO).
    There are already variations on that theme, including CD-ROMs of all
    your images for a reasonable cost. Further, you DO want to get your
    negs/pos. back. I can also scan my own film (or use a digital cam),
    PS it and send it via a Fuji appliqué to a store a few miles away who
    will print it for me in the size I like within an hour (during store hours).
    It is already. See above.
    You are right. The compelling attraction of digital is no-fuss
    convenience for "ordinary consumers".

    I personally see using film for the next few years at least, and
    certainly beginning the digital transition (I've been scanning for over
    5 years, flatbed and film, so it has begun).

    I think Kodak recognize the shift very well, but they've incorporated it
    into their corporate model instead of changing the corporate model to
    match the shift. A potentially deadly error, IMO. As you say thay have
    to get outside their current thinking.

    Cheers,
    Alan
     
    Alan Browne, Jul 28, 2003
    #61
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  2. Alan Browne

    Jeremy Guest

    x-no-archive: yes
    Oh, now T.P. has a friend who is the Director of an aerospace company!

    What a crock of s**t!

    The only contact he has with directors of aerospace companies is when he
    washes their windshields while filling their tanks.

    Pompass moron that he is!

    "Fill 'er up, T.P. . . . !"
     
    Jeremy, Jul 28, 2003
    #62
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  3. Alan Browne

    NickC Guest

    Alan, I find your posts interesting and informative. Keep up the good
    work.

    Nick
     
    NickC, Jul 28, 2003
    #63
  4. Alan Browne

    Alan Browne Guest

    Jeremy, You're absolutely wrong. I found the aerospace company:
    www.paperairplanes.co.uk

    Cheers,
    Alan,
     
    Alan Browne, Jul 28, 2003
    #64
  5. Alan Browne

    Dallas D Guest

    Plagiarism will land you in jail, Polson.

    --
    website: www.imageunlimited.co.za
    email: dallas at the above domain
    ..

     
    Dallas D, Jul 28, 2003
    #65
  6. Alan Browne

    Alan Browne Guest

    Thanks Nick. Very kind.

    Cheers,
    Alan
     
    Alan Browne, Jul 28, 2003
    #66
  7. Alan Browne

    NickC Guest

    I would hesitate to find Tom's post laughable unless I was more
    familiar with reorganization and departmental restructuring results of
    both these companies.

    Nick
     
    NickC, Jul 28, 2003
    #67
  8. Alan Browne

    NickC Guest

    Massive subsidy is a claim often made that is not true. If such a
    massive subsidy were allocated to US aerospace, the consolidations
    that have occurred would not have been necessary.

    Note: When RFQ's are released for US equipment procurement, British
    aerospace firms are also provided with the RFQ's and through such
    procedures, equipment contracts are awarded.

    The US Navy's T-4, for example, is 90% British design and built with
    electronic and minor structural US modifications.

    Nick
     
    NickC, Jul 28, 2003
    #68
  9. Alan Browne

    Alan Browne Guest

    Those subsidies were not direct cash infusions, they were development
    and procurement programs fueled, in the main, by the cold war and space.
    Unlike France, Japan and the UK where direct cash infusions were
    rampant until the 90's.
    Fantastic actually. And the American taxpayer is enjoying a standard of
    living that you can only fantasize about ... heck you could probably
    make it to 75 rolls per average *week* if you lived in the US. I hope
    whenever you ride in a US built airliner that you truly enjoy paying for
    the ride.
    Most of the layoffs and attrition are at the blue collar labour level
    and/or retirement incentives. The companies retain core talent, always.
    Quality management is foremost for customer satisfaction, certification,
    aircraft performance and contractual requirements. (What do
    British-Airways fly most? What airline was the second airline and first
    non US company to receive the B-777?). 1/3 of Air France a/c are
    Boeing. 3/4 of BA aircraft are Boeing.

    Enjoy piloting your paper airplanes. (Cripes, now he'll claim to be the
    master paper airplane flyer of Upper-South-Darbyshire.)

    Cheers,
    Alan
     
    Alan Browne, Jul 28, 2003
    #69
  10. Alan Browne

    Alan Browne Guest


    The governments of France, Germany, the UK and Spain are providing low
    interest (read:refundable) loans for about $3-$4B of the $12B
    development, not cash backing. All of this conforms to accords between
    the US and the EU for 100+ seat aircraft development allowing refundable
    loans of up to 1/3 of the development to come from government. They are
    loans that this industry could not possibly get from investment bankers,
    customers or their own operating cash flows. Even recently, Airbus was
    forced to re-evaluate its cash flows to make sure that operating profits
    on current manufacturing (for another 5 years) needed as part of the
    investment for the A-380, would be sufficient.

    Boeing, likewise could obtain such loans from the US government under
    the accord.

    Here's the dirty laundry: The accord above is for "viable" aircraft
    programs. "Viable" meaning, hey, yes, there's a market and it will be
    profitable. Boeing and the US government have pushed (at least in the
    Clinton days) against the loans to Airbus by saying the market is too
    small for such a huge aircraft and that Airbus can't make enough A-380's
    to be viable. Time will tell. (When Boeing first introduced the
    747-100 everyone thought the market was too small also). What is almost
    certain is that if Boeing also built a super jumbo is that the market
    would be too small for both players, at least for a reasonable ROI.

    So far the big customers for the 380 are not enough to make the 380
    viable, but it is a great start.
    http://www.speednews.com/lists/AirbusA380.html

    Cheers,
    Alan
     
    Alan Browne, Jul 28, 2003
    #70
  11. Alan Browne

    Annika1980 Guest

    From: Alan Browne
    You proposed a breakup so that the film division would not drag down the more
    profitable digital division (I am paraphrasing here). If this premise of yours
    is true, then the film division should be sold immediately, if not to Fuji then
    to someone else. If you know the film division is going to fail, why keep it
    going at all?
     
    Annika1980, Jul 28, 2003
    #71
  12. Alan Browne

    Alan Browne Guest

    First of all, this is getting very distorted.

    Digital sales for Kodak in 02 were on the order of $1B and other sales
    on the order of $11.8B. So, regardless of how poorly they operate, the
    profit is coming in large part from the non digital side.

    Kodak (as illustrated at the top of the original thread) have organized
    to market to Photography, Medical, Commercial and Displays. Displays is
    inherently digital, so we know where that goes.

    For the three others, the organization recognizes the film and digital
    needs and uses of those markets. This could be called a great
    organization because it is (or appears to be) customer focused, customer
    driven, blah, blah.

    The way I see it, however, is that this great organization is wrong for
    a changing world which expects change.

    Now, if you were a $1B/year in sales company and were litterally given
    $560M in cash to really go whole hog digital, you would be in a rare and
    powerful market position. Kodak Imaging would bravely ignore its legacy
    (except for the name brand) and move forward without even thinking about
    that messy, stinky film stuff. Customers happy.

    For the film side, it becomes a cash cow to be milked by the investors,
    who, if they see fit can invest those earnings (dividends, stock sales)
    into the new digital company or ... elsewhere. The market system at work.

    The question is "can't Kodak stay in one piece and do the same thing?"

    Maybe, but they sure as hell are not doing it now.

    Cheers,
    Alan.
     
    Alan Browne, Jul 28, 2003
    #72
  13. Alan Browne

    Bob Monaghan Guest

    Alan, that is the whole point. Kodak _can't_ split into a film corp. and a
    digital corp. The digital corp. side is and has long been losing money.
    That money is being drained from the profitable, namely film side of the
    corp. If you split them up, the digital side would crater. They can't make
    $$ in digital by rebadging somebody else's printer (lexmark) or digicamera
    technology and software, and losing money on every camera sale as they
    have in the past. It is not clear to me that they are going to be one of
    the few winners left standing at the end of the digital market shakeout. I
    may not be the only one in doubt, in light of the declining price of
    kodak's stock ;-)

    grins bobm
     
    Bob Monaghan, Jul 28, 2003
    #73
  14. Alan Browne

    Alan Browne Guest

    The digital company can start with assets in place, $1B in sales and
    nearly $600M in cash. That is a great start...it may require shortening
    the lines and re-building. But damnit do it right and think 'new' not
    Kodak.

    To answer your question:

    -Split 'em up as I proposed

    -As the film business piles up money from sales, it will need to invest
    the cash. Some in film product improvements, capital improvement, and...

    -The digital company will need investment cash and issues stock, but
    reserves half (or some amount) of it unsold.

    -The old film company buys the unsold stock in the new company in
    chunks every quarter in proportion to its earnings (minus dividends,
    taxes, reserves), transfering cash to where needed ... (( if you buy
    some of the new dig company stock issue your fortunes would be tied to
    both its improved outlook and the cash coming in from the old film co!!! )).

    -As the film company winds down over 10+ years, its assets (stock) grow
    from the digital investment(s). (Old Kodak becomes, over time, a
    holding company, mainly of the new digital co.)

    -In 15 years they merge and come full circle. No taxes are collected
    in the merger, the stockholders of both comapanies make out like
    über-bandits (taxes are collected). The film division (merely a dvision
    now) continues to approach (if it isn't already there) the low plateau
    of sales. [The digital folks at Kodak Imaging snicker at it... until
    they realize how their stock options were really boosted by the legacy.]

    Before anyone howls in protest, the reason this is viable and valuable
    is because management will be seperate and will do what is best for
    their own company's growth.

    Cheers,
    Alan
     
    Alan Browne, Jul 29, 2003
    #74
  15. Errr... nothing about how the government is guiding industries in the
    same way now as in the 1960s. That was your point, right?

    Karen Nakamura
     
    Karen Nakamura, Jul 29, 2003
    #75
  16. Alan Browne

    Alan Browne Guest

    Errrr ....that was never my point. Here is a synopsis:

    I wrote about the original subject - Splitting up Kodak. The 'J' word
    was not once in my post. Only Fuji as a strong competitor.

    Someone wrote about the meanace of the Japan government directly funding
    companies.

    I replied about the embrace of banks with comapnies, egged on by the
    Japanese gov't and cited the source (erroneously as it comes out) and
    said, "ooops don't have it around"

    You slugged me.

    I dug up the source.

    Love your website.

    Cheers,
    Alan.
     
    Alan Browne, Jul 29, 2003
    #76

  17. Errr... Japanese banks haven't been investing funds into companies for
    over a decade. That's why so many are deep in the red: Hitachi,
    Matsushita, Sony, etc.

    The most the government's done is slash the prime rate, but that isn't
    any different from what Greenspan's doing.

    Your data is about 2 decades out of date.

    Karen Nakamura
     
    Karen Nakamura, Jul 29, 2003
    #77
  18. Alan Browne

    T P Guest


    Successive US Governments have been in the pocket of big business for
    decades. Nothing new there!
     
    T P, Jul 29, 2003
    #78
  19. Alan Browne

    Alan Browne Guest

    ***WARNING*** long winded reply.
    ================================

    Deep in the red has a time limit. Deep in the red has a friend. Friend
    in Japan is called "bank". In the US, friend is called investor. And
    Mr. US Investor is famously short on patience. This is what makes the
    North American and European Cap Markets very efficient. The point of
    the article is that banks are too patient in Japan, and they have too
    much in loans out there. This DEPRIVES the Japanese markets of capital
    that would otherwise be efficiently used. I thought that was clear
    enough in the two sections I typed out for you, but I guess not.
    The Japanese economy has been in 18 years of stagnation. The article I
    cites is from Sept of 2002.

    The current problems in the US have all of the appearance of the
    Japanese problem (of 18 years ago) except for the points I mentioned
    about who is holding the investment. 1) In Japan it is the banks who
    are taking their sweet patient time with their customer companies, egged
    on by the government.

    2) In the US, it is the markets that are holding the sword over companies.

    And these markets (investors) are very quick to ask THE FUNDAMENTAL
    QUESTION of evaluating a current investment, no matter what its current
    value (par, neg, pos): "What can I do with this money if I sell my
    position now?" And if the answer, whether par, or negative or positive
    is that they can do better somewhere else, they pull their money and put
    it somewhere else. If this kills the currently invested business then
    too bad.

    Don't get me wrong, except for this issue (and the Japanese economy
    fully reflects it) Japanese companies are in the main excellent. In my
    travels there on business over the last 10 years or so I saw how
    dedicated and talented Japanese engineers and business people are. I
    also saw many inefficiencies, including company staffs that were way to
    large and administration processes that were burdonsome and inefficient.

    Here is a anacdote, which is not perfectly related. I was staying at
    the Shinjuku Hyatt. In my room was a coupon for discounts at a local,
    large department store in ths shopping district. So I sashay over to
    the deaprtment store and begin looking for various gifts for the dinner
    that was being thrown (shucks) in my honour by our new representative
    that I had officially signed up that morning. (I had brought gifts from
    Montreal, but not enough, and had already given most of them away during
    visits to customer comanies).
    So I pick out this and I pick out that, and so on... about 30,000 yen
    worth. I present the coupon. Dead stare, the lady hands it back and
    lets go a very polite torrent of Japanese that my 7 word Japanese
    vocabulary couldn't handle. The coupon was a special deal for Hyatt
    customers and that department store. I apologize, I don't speak
    Japanese. She runs off (leaving the cash drawer wide open, bulging with
    large bills), and 5 minutes comes back with another lady. We go through
    the coupon deal again. The second lady expalins to me that the coupon
    is not valid. I look at the coupon: it names the Hyatt, the specific
    department store (incl. address) and the dates. All in order . All is
    in Japanese and English. The second lady runs away and 10 minutes later
    another very nice, a bit older lady comes back. She doesn't speak
    english, so a discussion between me and her via the second lady ensues.
    (I don't mind that a translator is required). She then asks me to follow
    her. We wait for an elevator for at least 5 minutes and then ride up a
    couple floors and then wait for a manager for 10 minutes. He looks at
    the coupon, sucks his teeth for a few minutes and then lets go a raft of
    Japanese at the poor lady. The poor lady beckons me to follow her, we
    go back to the checkout counter (everything has by now been very neatly,
    and very nicely gift wrapped, first class) and the transaction goes
    through with the discount. Why did I wait? Why not just pay for the
    (expense account in any case) goods and get on with life? Well, I was
    in no hurry... lunch ended at 14:30 and dinner would be at 20:00 and I
    had the afternoon free and was just walking around anyway. I wanted to
    see this played out, especially as nobody, exp. me understood what was
    going on.

    So, Alan, what's the point? Glad you asked. In the US/Canada
    presentation of a coupon for a promotion is automatically accepted by
    the teller without question. It simply says for what and when it is
    valid. Boom. done. In Japan, the slightest doubt is bucked up the
    chain. And it can take many layers of bucking for something to happen.
    (Korea is much, much, much, much worse, I assure you.)

    The department store example is humorous at least, but also indicitive
    of ineficiency that is not tolerated in the US.

    Having said all that, I look forward to every trip to Japan, and
    Japanese businesses are easy to work with, straightforward in their
    approach and they do get things done. A little patience goes a very
    long way. At one company (Fuji Heavy Industries ...no relation to Fuji
    film) a fellow almost fainted when he met me. He knew my father from
    the late 60's! (I share my dad's Christian name). On a new product it
    can take twice as long to get sales in Japan compared to Europe or the
    US, but the relationships and the duration of business dealings last a
    very long time.

    In closing, Nakamura-san, I have nothing against Japan, nor the Japanese
    people, companies or government. However, their economy has been
    stagnant, and the analysis of some specialists is that they are
    strangling their own capital base. The Nikei bears this out.

    Cheers,
    Alan
     
    Alan Browne, Jul 29, 2003
    #79
  20. Alan Browne

    Alan Browne Guest

    See my other posting in reply to NickC.
     
    Alan Browne, Jul 29, 2003
    #80
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