As Brent Archer recently wrote, Eastman Kodak (NYSE: EK) has been one of the most visible sponsors of the Olympic games for years, but it's a partnership that's coming to an end. After the Beijing games in 2008, Kodak will no longer pay the $50 million plus per Olympiad to be the official film and imaging sponsor.Shares of Kodak have been terrible performers over the past decade as the company faces increased competition in the digital age. The Street appears to approve of dropping the Olympics, and the stock was up more than 5% on the news.
And maybe it is a sensible cost-cutting move -- cost-cutting moves nearly always send a company's share price up. Movie Gallery (NASDAQ: MOVI) soared last month after the rental-chain announced it was closing 13% of its stores, only to tank when bankruptcy rumors emerged on Friday.
Maybe the investors who were buying in September should have asked themselves this: what does it say about a movie rental business when having fewer locations is awesome news? If it's a good business to own, wouldn't you want more locations?
And now Kodak is the latest name to see a surge on cost-cutting news -- it probably will provide a boost to the company's bottom-line, possibly at the expense of the longer-term strength of the brand. Kodak's sales have declined these past few years, and ditching the Olympics doesn't seem like the way to get them going again.
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Reader Comments (Page 1 of 1)
10-15-2007 @ 3:49PM
Paul F. Stornelli said...
Kodak has been downsizing every year since the late 70's. They didn't recognize digital photography until it was too late and the quality of their digital cameras is pathetic. The company is run by a bunch of old white engineers who are too stuff shirted to recognize trends and they lack true innovation. They should just liquidate the company and end the misery. The stock is probably the best short out there.