Brain Food: Behind the spin


Last Updated: 31 Aug 2010

The digital revolution caught the 114-year-old photographic business napping. Kodak vastly underestimated the demand for digital cameras around the world and is now working to speed its change from film supplier to digital imagery business. Undergoing a big restructuring, it recently declared 10,000 redundancies on top of the 15,000 announced last year (600 jobs will go in the UK). Strategy enforcer Antonio Perez, formerly of Hewlett-Packard, stepped up to the plate in June, after CEO Dan Carp, a Kodak lifer, unexpectedly resigned.


Carp (now Kodak chairman) recently told the Chief Executives' Club of Boston: 'When you have a leading position in a growing, highly profitable business, changing prematurely leaves a lot of money on the table ... But it was in late 2002, when digital cameras were coming on strong, that we knew film wouldn't bounce back. The realisation was one of the most liberating moments of my career. I knew it was coming for 35 years. So when it came time to act, I was energised to help transform Kodak for the digital world.'


Despite Carp's new-found energy, Perez's appointment didn't come a moment too soon. His background running the consumer and digital-imaging businesses at HP makes him the person to transform Kodak. Already, the company is the US's biggest seller of digital cameras, and this year, digital technology will become Kodak's biggest earner for the first time. Said analyst Christopher Carosa of Carosa, Stanton & DePaolo: 'The company is on the path that they need to go on, and they are executing the best that they can ... Antonio is a dynamic guy that everyone is very excited about.' Observed another analyst, Mark Lanyon at Morningstar: 'They brought him in to manage the harsh realities of the turnaround.' And they are harsh. Kodak reported a net loss of $146 million in the second quarter. Restructuring costs, and an underestimation of how much film sales would decline in emerging markets (namely China), have taken their toll.


Shedding film manufacturing plants and stepping up the development of digital products won't be enough to ensure Kodak's future - hence its $3 billion investment in new markets such as commercial printing and medical imaging. If Perez gets it right, Kodak really will be energised. If not, the shutters could come down for ever.

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