Kodak is now down to five businesses: commercial packaging and printing, consumer inkjet, entertainment imaging, commercial film, and speciality chemicals. Along with exiting the digital camera business, Kodak has announced an exit in personalized imaging and document imaging businesses. Gone will be the Kodak kiosks, Kodak paper, and event imaging bits.
At issue is Kodak's cash. Short answer: they need more. While the last 10K they filed shows a cash increase, much of that was due to debter in possession (DIP) financing (US$686m out of US$1,361m). To get out of bankruptcy, Kodak has multiple issues it has to deal with, the two biggest of which are (1) get the businesses they want to keep (mostly commercial printing and packaging) into sustainable growth and profitability; and (2) raise enough cash to pay the DIP and put the company coming out of bankruptcy on a healthy footing.
The original plan apparently was to shut down the hemmoraging digital camera business and sell off the patent portfolio. But it's becoming clearer that the bids on the patent portfolio are relatively low, probably not even enough to cover the DIP financing. So we get yet another spin out. If I'm reading the first quarter results correctly, these are not all currently profitable businesses Kodak is trying to shed, though some are. The quote in the press release says "enjoy leading market positions," not "are healthy businesses" after all.
The problem here, and the reason for my headline, is that Kodak is still in a downhill spiral as far as we can see. We keep getting additional businesses they'll exit, more products they'll sell or cease, and no positive news. They were in a dive when they entered bankruptcy. The question is whether there is any evidence they've hit the bottom of the dive? The answer to that, as of today, is no. They're still throwing stuff overboard in hopes the plane will level off and start climbing again. At some point, you run out of altitude.
I note that Kodak is now saying that they hope to emerge from bankruptcy sometime in 2013. Do they have that much more altitude left? That's a minimum of six more months of losses and tightening cash. They need a healthy chunk of cash from somewhere. Today's announcement is another attempt at raising it (selling the non-profitable personalized imaging and document group). But the previous attempt hasn't raised any cash yet (patent sales). Today's announcement smacks of fire sale, thus I've put Kodak on my Death Watch list.
No matter what, the Kodak of the future (which could be as extreme as someone buying mostly the name, as with Polaroid), won't look anything like the company you once knew. Their once famous slogan now takes on new meaning: "you press the (eject) button, we (creditors) do the rest."