Eastman Kodak (NYSE: EK), whose colleagues include Canon (NYSE: CAJ) and Sony (NYSE: SNE), did not start its new fiscal year with a picturesque first quarter. No, it was more of an ugly, frayed-at-the-edges, nightmarish image of doom and gloom. And although the photography company does have a point when it states right at the beginning of the release that the global economic malaise is affecting its prospects, let's also be realistic. Kodak has been doing badly for a long, long time. This isn't just about the economy. This is about a company that still hasn't properly adjusted to a new, thriving business model.
According to this article, Kodak's adjusted loss of $0.95 per share from continuing operations missed Wall Street's call. By a lot. Some in the analyst community thought that Kodak would lose $0.44 per share. Others thought the company would lose less than even that figure. Doesn't matter what source you look at, the facts in the case make it clear that Kodak is not doing well. Worldwide sales shed just under 30% of their value. The digital segment fared very poorly in Q1.
And here's another proverbial nail in the proverbial coffin. The dividend is gone! If that doesn't send a strong signal to the investment community, I don't know what will. It's no surprise, I suppose, that Kodak had to send its quarterly payment out to pasture. A look at the cash-flow statement is all that's needed to grasp the unfortunate reality.
You can read about the cost-reduction proposals in the release. They're there to make investors feel like management knows what to do to turn this sinking ship around. Hey, I can't predict the future, stranger things have happened. Maybe Kodak will turn around. Maybe those who buy now and hold for the long term will retire incredibly rich. But you'd have to be braver than Indiana Jones at a snake convention to pull the trigger on Kodak. I imagine that, once your order was filled, a big giant boulder would come rolling after your portfolio, wanting to crush it dead.
Looking at Kodak's long-term stock performance, as well as simply the price of the stock itself, I can safely say that there are definitely better investment ideas out there. You don't need to look far. I can't imagine that there are any true believers left in this entity. If there are, I wish them the best of luck.
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
5-01-2009 @ 3:52PM
Brgdriver said...
I am totally agreed with your analytical point of view...so disappointed in the top management executives who think they know their job and chopping all the loyal employees WW again, again and again. Meanwhile, they are having a great time up on the top floor of the Kodak Bldg on State St., Rochester