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.

Famous maker of photographic equipment and supplies Eastman Kodak (NYSE: EK) reported earnings for the second quarter earlier this week, and they have not changed my opinion whatsoever on the stock. The shares are to be avoided at all cost.

Yeah, I've got to admit, I've been bearish on Eastman Kodak for a long time. It isn't difficult to hold such an opinion, of course. The company reported net income on a GAAP basis of $0.66 per share from continuing operations as opposed to a loss of $0.53 per share from continuing operations in the year-ago period. However, the results for the quarter include a gain of $0.88 per share from an IRS refund, offset by $0.09 per share in other items of net expense (this yields a net benefit of $0.79 per share). Considering that last year's Q2 was affected by a net of $0.92 per share due to restructuring charges (which were offset by gains on asset sales), it can be seen that the adjusted scenario isn't impressive in the least.

I just can't get past the utterly horrible story behind this company and its long-term performance. Simply put, Eastman Kodak just didn't adjust properly to the transition from film photography to digital photography as it was happening. It's trying to make amends, but it hasn't been easy. In fact, colleague Elizabeth Harrow recently wrote an informative article on the awful history of the company and how its stock has been one of the worst performers of the last decade. She discusses the impact of competition from businesses such as Sony (NYSE: SNE) and Canon (NYSE: CAJ), as well as the demand of one big stakeholder for management to expand its current buyback program.

Microsoft Corp. (NASDAQ:MSFT) figures it is not in enough businesses already, so it plans to offer a high-definition photo [subscription required] format to the world's camera industry. The old standard, the Joint Photographic Experts Group (JPEG) compression format, has been around awhile and may not be able to break down photos into small files as well as Microsoft can.

The move by MSFT is not unlike the one that it made into the video world five years ago. It offered its Windows Media video compression in place of the old MPEG-2 standard for breaking down video files for transmission.

Moving photos around the internet is a big business. Companies like PhotoBucket and Flickr would not exist if photos could not be broken down digitally and sent over IP. The Microsoft product offers the opportunity to do this with less bandwidth usage than the JPEG format.

There is a lot at stake. Research firm NPD Group said that digital camera sales hit $6.9 billion in 2006. The new software could be a blessing for that industry.

Microsoft does not want money for the new technology; it is part of Vista. The world's largest software company thinks this might drive consumers to adopt Vista faster. It may be right.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Kodak's had a hard time over the past ten years. With the advent of the digital camera, Kodak's tried and true business model of cheap cameras and expensive film didn't translate too well. With lackluster digital offerings, especially when compared to its European and Japanese competitors, some worried Eastman-Kodak's (NYSE: EK) financial future wasn't exactly a "Kodak Moment." Now, it looks like Eastman-Kodak is kicking off a new digital push. Their new "fully featured" cams feature facial recognition, intelligent color metering, and integrated GPS.

Taking a page from "viral marketing 101," the company produced a pretty funny internal video, then posted it on YouTube.

It's definitely a refreshing video. Nice to see someone else hated the Advantix system... plus a resurgence of the "Kodak Moment" wouldn't be so bad. Although, I'm not sure the schmaltz really goes to 11 just yet; we'll have to see at next week's Consumer Electronics show.

[Via Engadget]