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Eastman Kodak — Another Corporate Icon Fights to Survive

August 2011 Marketing

The 2011 graveyard of dead icons might get another – Eastman Kodak (EK).

This 131-year old mainstay of Corporate America is struggling to survive.   It recently posted a much higher than anticipated loss and lower revenues.  It continues to struggle from selling film to selling digital camera and printers.  Its second quarter loss was $179 million, or 67 cents a share as compared to a loss of $167 million, or 62 cents a share in second quarter 2010.

Revenues fell 5 percent to $1.49 billion, lower than consensus estimates of $1.53 billion.

One of the brighter spots is that the company expected to generate $250 to $350 million in cash from intellectual property licensing.  This, apparently, is Kodak’s greatest asset.  One analyst, Rafferty Capital’s Mark Kaufman, said bluntly, “When you’re looking at Kodak’s revenue in the quarter, you’re not seeing any revenue from its 1,100 patents.  You are not seeing what may be the hidden value of the company.”

So here we have another potential tombstone in the graveyard of dead icons such as Merrill Lynch, Lehman Brothers, Border’s and Blockbuster.

George Eastman, founder of Kodak, transformed the camera into a mass commodity with his $1 Brownie Camera in 1900.  The company first started producing flexible roll film in 1888.  Like so many highly successful companies, Kodak embraced the new digital technology too late.  Rather than innovate, they had to react.  While Kodak remains the world’s leading film maker followed by Fuji, sales are drying up.  Only photographic aficionados use film anymore and digital technology is rapidly closing the image-quality gap.  When film camera break, they are generally replaced by digital models.

Adding to Kodak’s woes are falling camera sales thanks to competition from smart phones and high-quality, high-resolution inkjet printers.

A few decades ago, Polaroid was riding high with its instant camera.  Today it is nothing but a brand name.

While the AT&T brand still exists, the company died a decade ago when its initiative into cable and local telephone service failed.  Now SBC is using the AT&T brand name.

Pharmaceuticals are struggling to survive.  It’s really a losing game for the mega drug companies.  So much money goes into R&D.  Then, when a product is created that actually works, the Food & Drug Administration will subject it to long and rigorous testing.  If it manages to come onto the market, the lawyers are waiting in the wings to exploit the side effects.  If the drug product manages to survive all of these obstacles, its patent will expire and the drug will be produced as a generic.  Two of Pfizer’s blockbusters – Lipitor and Plavix — are due to come off patent and be sold as generics this year.

Today’s answer is Apple.  Whether it’s luck or innovative brilliance, this company has the Midas touch — everything it creates turns to gold.

 



About the author

James T. Berger, Managing Editor of The Wiglaf Journal, through his Northbrook-based firm, James T. Berger/Market Strategies, offers a broad range of marketing communications, research and strategic planning consulting services. In addition, he provides expert services to intellectual property attorneys in the area of trademark infringement litigation. An adjunct professor of marketing at Roosevelt University, he previously has taught at Northwestern University, DePaul University, University of Illinois at Chicago and The Lake Forest Graduate School of Management. He holds degrees from the University of Michigan (BA), Northwestern University (MS) and the University of Chicago (MBA). Berger is an often-published free lance business writer who has developed more than 100 published articles in the last eight years. For more information, visit www.jamesberger.net or telephone him at (847) 328-9633.

James T. Berger
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