Is Kodak at risk?

navilluspm · 03-10-2009

I caught this little bit of news from Bloomberg and it does not say much. Of course, it is still speculation, but my question is what would happen in Kodak did go into default on their loans?

http://www.bloomberg.com/apps/news?p...0FSIc&refer=us

(Sorry if this is the wrong forum)

dfoo · 03-10-2009

Clearly you cannot read a balance sheet. Kodak has 2.15bio in cash, and 1.3b in debt. On top of that they were profitable last year...

bmattock · 03-10-2009

Kodak is in danger. However, I also believe that they will survive as an independent corporation. As such, I have purchased Kodak stock. I had been considering it for some time. Last week, believing the bottom of the market for Kodak was near, I purchased. It has gone down even more since then, but I was buying for the long haul. I'll ignore it and see where it sits in ten years - if Kodak is still around, hopefully my investment will have done good things for me.

Bob Michaels · 03-10-2009

Quote:

Originally Posted by dfoo

Kodak has 2.15bio in cash, and 1.3b in debt. On top of that they were profitable last year...

Add to that they generated almost US$ 1/2 billion in cash for the most recent quarter. They are using that to reduce debt and repurchase stock. Step back and think about a company who believes that it's stock is such a good deal that they are buying it themselves.

I will not quibble with Moody's bond ratings but only say there is some real great yields on lower rated debt.

bmattock · 03-10-2009

Quote:

Originally Posted by Bob Michaels

Add to that they generated almost US$ 1/2 billion in cash for the most recent quarter. They are using that to reduce debt and repurchase stock. Step back and think about a company who believes that it's stock is such a good deal that they are buying it themselves.

I will not quibble with Moody's bond ratings but only say there is some real great yields on lower rated debt.

Guess who just bought a lot of Kodak stock?

http://www.bloomberg.com/apps/news?p...67YxY&refer=us

sooner · 03-10-2009

Bill, I find your investment in Kodak stock ironic, considering you are always beating the drum that film is dying if not quite dead. Personally, I got burned buying Kodak stock back in '99 when I foolishly took charge of my government IRA account, thinking it was a solid blue chip. Ha ha. It's entirely possible they are ready for a turnaround, and I know they have some industrial divisions that do well. But I would hold off if only because I think Kodak digital cameras still suck. And, these days there are plenty of other cheap stocks out there.....John.

ItsReallyDarren · 03-10-2009

Quote:

Originally Posted by bmattock

Guess who just bought a lot of Kodak stock?

http://www.bloomberg.com/apps/news?p...67YxY&refer=us

Here's hoping for a Microsoft film rangefinder!

That'll show Epson!

climbing_vine · 03-10-2009

I'll quibble with Moody's ratings. They're worse than throwing darts except for the few instances where they have solid, truthful insider information. The present conflagration (banks insolvent, to the score of hundreds of billions of dollars, rated AAA by Moody's and the other agencies to the bitter end) says about all that needs to be said. It's okay to say it out loud Bob.

bmattock · 03-10-2009

Quote:

Originally Posted by sooner

Bill, I find your investment in Kodak stock ironic, considering you are always beating the drum that film is dying if not quite dead.

Kodak is moving rapidly away from being a film company. I don't know if they woke up quickly enough or are moving fast enough, but they are trying.

And I don't 'beat the drum', I report the facts.

Quote:

Personally, I got burned buying Kodak stock back in '99 when I foolishly took charge of my government IRA account, thinking it was a solid blue chip. Ha ha. It's entirely possible they are ready for a turnaround, and I know they have some industrial divisions that do well. But I would hold off if only because I think Kodak digital cameras still suck.

I don't think their digital cameras are that great either. But they have a deep wellspring of patents that pay handsome royalties, and they make some awesome image sensors - as used in all the Hasselblads and large-size digital cameras. Nobody can even touch them there. They are still lead the nation in the number of patents filed each year, they've got some incredibly bright and inventive scientists working for them.

Quote:

And, these days there are plenty of other cheap stocks out there.....John.

One at a time. I'm also looking at some of them, but have limited discretionary funds to invest. Kodak was step one for me.

Pickett Wilson · 03-10-2009

Unfortunately, Kodak has a history of announcing everything is going great until they pull the plug (B&W paper for one example).

Robert Lai · 03-10-2009

Moody's has lost virtually all credibility for rating all the bundled subprime mortgage derivatives (CDOs) "AAA". Now they are trying to regain credibility by exposing the names of 15% of the bottom of the list of "at risk" companies.

Once a liar, always a liar.

Do your own homework.

Al Patterson · 03-10-2009

Quote:

Originally Posted by sooner

Bill, I find your investment in Kodak stock ironic, considering you are always beating the drum that film is dying if not quite dead. Personally, I got burned buying Kodak stock back in '99 when I foolishly took charge of my government IRA account, thinking it was a solid blue chip. Ha ha. It's entirely possible they are ready for a turnaround, and I know they have some industrial divisions that do well. But I would hold off if only because I think Kodak digital cameras still suck. And, these days there are plenty of other cheap stocks out there.....John.

I'm looking at Ford and my local bank. Kodak has been on my watch list, but I'm not yet convinced they are moving fast enough in the right direction. But 100 shares of EK wouldn't break me.

Rob-F · 03-10-2009

Al: "Ferroequinologist." Just free associating: iron horse? Are you into steam locomotives?

bmattock · 03-10-2009

Quote:

Originally Posted by Al Patterson

I'm looking at Ford and my local bank. Kodak has been on my watch list, but I'm not yet convinced they are moving fast enough in the right direction. But 100 shares of EK wouldn't break me.

Yep, we're thinking the same. I went EK before F. It was a coin toss on which one to buy first.

Trius · 03-10-2009

Quote:

Originally Posted by bmattock

they've got some incredibly bright and inventive scientists working for them

Bingo. Whether the suits on State Street can translate that into commercial success is another question. Thank God Pickett Wilson isn't one of them. In that case you could wave goodbye to your investment.

chris00nj · 03-10-2009

Kodak is neither great nor going to fail immediately. Film actually keeps them afloat, but it is shrinking.

From their 10-K, before other charges and expenses:

Their digital group lost $177 million. In 2006, they lost $206MM
Their film group made a profit of $196 million. In '06, they made $316MM.

So their digital group has always sucked, but their moneymaker is dying. Anyone wonder why they put out Ektar 100? Their cameras are geared toward the low end of the market and face a lot of competition whereas they only had a couple competitors in the film production. It doesn't take a rocket scientist to see they have a long term strategy problem.

In the short term, they will be okay. Cash flow is key to survival, not income. It sounds confusing unless you know how our accounting system works regarding things like depreciation and impared assets.

bmattock · 03-10-2009

Quote:

Originally Posted by chris00nj

[*] Their digital group lost $177 million. In 2006, they lost $206MM[*] Their film group made a profit of $196 million. In '06, they made $316MM.

We've been through this before. Anyone who believes that is not capable of reading a balance sheet. They lost money in film - they made it look like they made money in film by taking a non-GAAP depreciation on their physical plant and other accounting tricks that can't be repeated year on year. The biggest category percentage drop WAS from the film group.

However, believe what you wish, I'm not going to revisit that nonsensical argument with BEMs again. I can read a balance sheet, and that is why I made the investment.

Merkin · 03-10-2009

Quote:

Originally Posted by Pickett Wilson

Unfortunately, Kodak has a history of announcing everything is going great until they pull the plug (B&W paper for one example).

I think kodak pulling the plug on black and white paper was probably a smart move for both kodak and photographers. Sure, there is a little bit less choice in the market, but it was many people's last choice. There are other companies, notably ilford, that make better paper than kodak. On the other hand, lots of people still use kodak chemistry, color paper, and film. Kodak is in a position where they can't do everything they used to do, so they are focused on doing what they do the best, such as high-end sensors and film. The new Kodak Ektar has just come out in 120, their c41 black and white film is (imho) superior to ilford's, and myself and a number of other people i have talked to have a feeling that you will still be able to get tri-x when you can't get any other film. Personally, I wouldn't be surprised if they made at least one more master reel of kodachrome, as it seems that the premature report of its demise has initiated somewhat of a kodachrome renaissance. You can't swing a dead cat around the internet without hitting someone talking about using kodachrome. If kodak drops anything out of their lineup of film and film related products in the next couple years, it will probably be some of their chemistry, or perhaps some of their less popular films.

Al Patterson · 03-10-2009

Quote:

Originally Posted by Rob-F

Al: "Ferroequinologist." Just free associating: iron horse? Are you into steam locomotives?

That is correct sir. I've been shooting steam engines at various tourist railroads for 15 years or so.

bmattock · 03-10-2009

Quote:

Originally Posted by Al Patterson

That is correct sir. I've been shooting steam engines at various tourist railroads for 15 years or so.

The term was also used in a recent episode of 'Psych'. I'm not a fan of the show - in fact, seldom watch TV except for 'House' and the Cartoon Network's Adult Swim, but I happened to catch that one.

chris00nj · 03-10-2009

Quote:

Originally Posted by bmattock

We've been through this before. Anyone who believes that is not capable of reading a balance sheet. They lost money in film - they made it look like they made money in film by taking a non-GAAP depreciation on their physical plant and other accounting tricks that can't be repeated year on year. The biggest category percentage drop WAS from the film group.

However, believe what you wish, I'm not going to revisit that nonsensical argument with BEMs again. I can read a balance sheet, and that is why I made the investment.

I just took a look at their 10-K for the first time, so I don't think i've been through it before. Any charges are made on an income statement not a balance sheet.

The group had a large decline, but it made money versus losing money in the digital group.

Despite any benefits gain from the change in depreciation, they had a large decline in the film group, but it was still profitable whether you look at it from an accounting standpoint or a cashflow standpoint.

I don't think buying EK at $2.30 is a bad thing. Options go for that. I don't think it's going to go to $0. However, in order to regrow the company to the point of sustained profitability it's going to have to reconcile an declining film group and an unprofitable digital group.

bmattock · 03-10-2009

Quote:

Originally Posted by chris00nj

I don't think buying EK at $2.30 is a bad thing. Options go for that. I don't think it's going to go to $0. However, in order to regrow the company to the point of sustained profitability it's going to have to reconcile an declining film group and an unprofitable digital group.

I bought a bit higher, didn't quite judge the bottom, but then I wasn't trying to (just hoping I might have). I bought as an investment, long term. I'm a contrarian investor but I buy and hold. Time will tell if my decision was wise or not.

chris00nj · 03-11-2009

Quote:

Originally Posted by bmattock

I thought a stock was only a 'penny stock' when it hit the delisting limits on NASDAQ, NYSE, etc?

In any case, you are right about limited downside. And frankly, buying one share of Google would not make me as happy as the equivalent in EK.

Hard to say - but it doesn't matter. I may revisit and buy more, once I've made the rounds of my primary picks (which requires time for me to earn more money to set aside discretionary funds). I'm buying to hold, so what EK does or does not do between now and 2019 doesn't concern me much as long as it stays in business.

A "penny stock" is generally considered any stock under $5. The allure is that if the stock goes from $2 to $4 you double your money and could happen faster than a stock goes from $50 to $100. However, under normal circumstances, the stock is at $2 for a reason (usually high amounts of debt interest in comparison to their gross profit) and tends to go lower. However, this is NOT a normal time, and overall market fear is pushing stocks down much lower. GE is even at $8!

bmattock · 03-11-2009

Quote:

Originally Posted by chris00nj

A "penny stock" is generally considered any stock under $5.

Interesting - I really thought it was stocks under a dollar that traded on the 'pinksheets'. I remember reading the 'Penny Stock News' back in the halcyon days before the S&L Crisis, when I thought someday I'd be a gozillionaire.

Quote:

The allure is that if the stock goes from $2 to $4 you double your money and could happen faster than a stock goes from $50 to $100.

Well, yes. It seems more likely that a stock would go from $2 to $4 than from $200 to $400 in a short period of time.

Quote:

However, under normal circumstances, the stock is at $2 for a reason (usually high amounts of debt interest in comparison to their gross profit) and tends to go lower.

Yes, that is my opinion as well. The market in general tends to value stocks correctly over a long period of time.

Quote:

However, this is NOT a normal time, and overall market fear is pushing stocks down much lower. GE is even at $8!

I agree that market fear is driving stock prices like never before. That seems like an opportunity to me. If people want to be driven by fear, I can't stop them - but I can bet against them. I'm an optimist on America. I think we'll be OK. It might end up being a new political and financial landscape, not like it was before, but still OK.

bmattock · 03-11-2009

Quote:

Originally Posted by photomoof

We could have a "Mad Max" future of course, but there is no way to plan for that.

Well, there is...and I do...but let's not talk about that here. Makes people upset.