So, when you look at the second-quarter press release from Eastman Kodak (NYSE: EK), you notice something right off the bat. Part of the headline reads as follows: "Kodak Reports 2nd-Quarter 2009 Results, Reflecting Global Economic Realities." I don't think a shareholder can feel too encouraged after mentally processing the implied image that the results are like a mirror being held up to the ugly face of the recession, do you?
I didn't think so. Anyway, sales declined 29%, and I don't think we can use the currency issue to save the day on this particular top line. On an adjusted basis, the 43 cents from continuing operations that was lost during the quarter missed expectations by 7 cents, according to Reuters.
Kodak is just not in a good place. In terms of comparisons, last year at this time, the company had positive income instead of a loss. Cash flow is terrible. And there's no chance one can come away, after reading through the report, with a feeling that management has figured out a proper paradigm for getting the stock moving again. I have to wonder how many investors out there have stubbornly held on to their shares, praying that Kodak will someday come back.
That's looking more and more doubtful. Kodak, whose colleagues include Sony (NYSE: SNE) and Canon (NYSE: CAJ), is still struggling to adjust to the new world of digital photography. Unfortunately, the company seems to be so focused on defending its cash flow and implementing restructuring initiatives that I get the sense that innovation is not a process it can adequately engage and address. Kodak just isn't the force it was in the past. Heck, management even had to pull the plug on the iconic Kodachrome product.
I'll stick to the opinion I expressed back in the first quarter: I am not a buyer of Kodak. I'm not sure I'll ever be a buyer of Kodak. When it comes to business models that should scare an investor away, you can put Kodak at the top of the list.
Disclosure: I don't own any company mentioned; positions can change without notice.
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