As Kodak Fades, Bankruptcy Rumors Surface Again

The Wall Street Journal’s lede piece -- of five -- breaking the story about Kodak’s imminent filing for bankruptcy protection perhaps provides a macabre parallel between the company’s founder suicide and its present predicament.

"To my friends, my work is done,” George Eastman wrote at age 77. “Why wait?"

Kodak, which Mike Spector and Dana Mattioli describe as the Google or Apple of its day, actually claims to have invented the technology that has primarily led to its downfall –- the digital camera -– but it never figured out how to make a business out of it.

Antonio Perez, Kodak’s chairman and CEO, has been trying to raise cash by selling more than 1,100 digital imaging patents, as well as some other business units, to focus on printers, as has been widely reported. The former Hewlett-Packard executive joined Kodak in 2003 as president and COO and has been at the helm since 2005, according to a Forbes bio.

In its heyday, Kodak had such a monopoly on film that founder Eastman initiated "wage dividend days" on which all workers were paid bonuses based on results. In classic spread-the-wealth fashion, the employees “would use the checks to buy cars and celebrate at fancy restaurants,” Spector and Mattioli write.

Kodak’s response to the story was a typical “as a matter of longstanding policy, we don’t comment on market rumors or speculation.” And while the WSJ’s reporting, as well as follow-ups in other media, makes it clear that preparations for a Chapter 11 are underway and a filing takes place this month or in early February, the picture is still developing.

“Signs of the company’s gathering problems have become more apparent in recent days with the departure of three directors and a warning from the New York Stock Exchange that it risked being delisted if its shares remain below $1, write Richard Waters and Tom Braithwaite in the Financial Times. “Two representatives of buy-out firm Kohlberg Kravis Roberts, which put $300 million into Kodak in 2009, quit the board late last month, along with Laura Tyson, a chairwoman of the U.S. Council of Economic Advisers during the Bill Clinton presidency.”

But Beth Jenks, who reminds us that Bloomberg News reported in September that Kodak was considering a bankruptcy filing among other options, writes that Tyson says her upcoming schedule makes it “virtually impossible” to serve, and she resigned to help the company reach an “optimal board size.” And Tyson makes clear that her departure is “not a statement about the firm’s strategy or the firm’s leadership.”

The news of Kodak’s most recent woes reverberated across the world, from the BBC to the Times of India, reflecting the global impact the company once enjoyed. It also “spooked” shareholders, as a CBS News hed on the AP story put it, sending shares plummeting by 28% to close at 47 cents. Kodak will release its fourth-quarter 2011 financial results early on Thursday, Jan. 26, followed by a conference call (480-629-9818, conference ID 4501633#) with Perez and CFO Antoinette P. McCorvey at 11 a.m. EST.

"Everybody has a sinking feeling," Buckman, Buckman & Reid broker Ulysses Yannas tells AP. "It's possible they can file for bankruptcy protection. Yet I don't think it's probable -- principally because the need for cash is not imminent."

The Washington Post has an illuminating slide show on “other companies that have trod the path from a Dow Jones Industrial Average listing to mere memory” such as Mack Trucks, which was dropped by the NYSE in 1930, and The Victor Talking Machine Co., (1928). Of more recent memory: Borden Milk.

“The view from the top” of Kodak “was too foggy,” Wall Street historian John Steele Gordon tells MarketWatch in a podcast interview. He says that it suffered from “monopoly disease” and had become bureaucratic and unimaginative by the time that digital technology came along.

A New York Daily News editorial laments that Kodak “became a company of yesterday, not tomorrow.” But there’s no use shedding tears. “The U.S. and New York need to grow forward-leaning enterprises, not mourn the loss of greatness past.”

In a sidebar in the WSJ, columnist John Bussey asks: “Was it a failure of imagination? Was it entrenched convictions and provincial thinking? Was it one restructuring too far?” All of the above, he concludes, and elaborates upon in a story that aptly carries the phrase “long, slow slide” in its headline.

“In the cartoon Popeye, the character Wimpy often makes this promise: ‘I will gladly pay you Tuesday for a hamburger today,” Bussey writes.  Yep. It’s Tuesday –- not only for Kodak, of course, but also for other companies that have been coasting on yesteryear’s iPads and search algorithms.