Eastman Kodak: Even a Skinny Elephant Can't Dance
A streamlining plan will make this former film giant leaner, but it’s not likely to make the stock sing.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Famed Legg Mason fund manager Bill Miller is known for his daring contrarian picks. With impressive reliability, he finds diamonds not just in the rough, but in the rainforest. One of his favorite out-of-favor stocks is Eastman Kodak. Miller told us recently that Kodak's cut-to-the bone restructuring and its new inkjet printer products will double the stock price of the former film giant. The word "former" applies to both "film" and "giant." Film is a buggy-whip technology, and Kodak's payroll will shrink to less than 30,000 by the end of the year. That's half of what it was three years ago, and a fraction of its 145,000 peak in the late 1980s.
Full disclosure: Nobody wishes Kodak well more than I do. I worked for 12 years as a business reporter and editor for the daily newspaper in Rochester, N.Y., Kodak's hometown. While I tried to remain impartial, I couldn't help but root for a company that meant so much to the community where I lived and where many of my friends worked.
But with all due respect, I think Bill Miller has it wrong. In 1986, former Kodak chairman Walter Fallon famously wondered, "Can the Rochester elephant be made to dance?" The answer, more than 20 years later, is "not yet." The company has repeatedly promised that downsizing and new products would result in dramatic turnarounds, but it has yet to pull one off.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Kodak has always employed the best and the brightest, says William Patalon, a financial journalist who covered Kodak for years. But a "stultifying" culture made it "incapable of being nimble and flexible," Patalon says. He recalls how it couldn't get single-use cameras to market fast enough to beat the competition, and wound up playing catch up. And now, he points out, its strong share of the digital camera market is slipping.
The company promises that things will be different this time, but Kodak has said the same so often in the past that it's hard to take the latest assurances seriously. On March 14, Kodak announced that it was giving the responsibility of cutting costs to the heads of its two biggest divisions. So streamlining will again become a priority, and streamlining has always distracted the company from growth and innovation.
Kodak is still sluggish at getting products to market in a timely manner. It’s been promising it would break into the inkjet printer market for more than three years and just introduced its first three models on March 13. So the company may be skinnier, but it still has a trunk and tusks.
The strategy for these new products is simple. Kodak printers will cost a bit more than high-end printers sold by market leader Hewlett Packard, but its cartridges will cost $10 to $15 -- about half the price of HP's products. Credit Suisse analyst Rob Semple says that the small number of Kodak's products and limited distribution make success of its printers "an uphill battle."
I’ll add that if Kodak seriously starts cutting into rivals' cartridge business, HP and Lexmark will cut their prices or find some other way to fight back.
Investors need to recognize that Kodak's foray into inkjet printers is a bet-the-farm gamble. Kodak said in January that it's selling its health-imaging unit to Onex for up to $2.55 billion – so Kodak will live or die on digital imaging. Analysts don't think the odds are good. Kodak's stock (symbol EK) closed March 17 at $23.04, up 0.88% for the day. At that price, it sells for 22 times the $1.05 per share that analysts, on average, expect the company to earn next year. That's a healthy multiple for a not-so-healthy company.
So unless you like long shots, or are holding on for sentimental reasons, sell your Kodak stock. But the next printer I buy will have a Kodak logo on it. I hope it will be the first of many, not a memento.
-
Dow Leads in Mixed Session on Amgen Earnings: Stock Market TodayThe rest of Wall Street struggled as Advanced Micro Devices earnings caused a chip-stock sell-off.
-
How to Watch the 2026 Winter Olympics Without OverpayingHere’s how to stream the 2026 Winter Olympics live, including low-cost viewing options, Peacock access and ways to catch your favorite athletes and events from anywhere.
-
Here’s How to Stream the Super Bowl for LessWe'll show you the least expensive ways to stream football's biggest event.
-
If You'd Put $1,000 Into AMD Stock 20 Years Ago, Here's What You'd Have TodayAdvanced Micro Devices stock is soaring thanks to AI, but as a buy-and-hold bet, it's been a market laggard.
-
If You'd Put $1,000 Into UPS Stock 20 Years Ago, Here's What You'd Have TodayUnited Parcel Service stock has been a massive long-term laggard.
-
How the Stock Market Performed in the First Year of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
If You'd Put $1,000 Into Lowe's Stock 20 Years Ago, Here's What You'd Have TodayLowe's stock has delivered disappointing returns recently, but it's been a great holding for truly patient investors.
-
If You'd Put $1,000 Into 3M Stock 20 Years Ago, Here's What You'd Have TodayMMM stock has been a pit of despair for truly long-term shareholders.
-
If You'd Put $1,000 Into Coca-Cola Stock 20 Years Ago, Here's What You'd Have TodayEven with its reliable dividend growth and generous stock buybacks, Coca-Cola has underperformed the broad market in the long term.
-
If You Put $1,000 into Qualcomm Stock 20 Years Ago, Here's What You Would Have TodayQualcomm stock has been a big disappointment for truly long-term investors.
-
If You'd Put $1,000 Into Home Depot Stock 20 Years Ago, Here's What You'd Have TodayHome Depot stock has been a buy-and-hold banger for truly long-term investors.
