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Kodak Company Case Study Analysis

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Introduction

Eastman Kodak was started in 1880 by a high school dropout when George Eastman invented a dry-plate process in a company at Rochester, New York, which was then used in production of dry photographic plates. Since 1892 when Eastman decided to name the Eastman Dry Plate Company as Eastman Kodak, the company has emerged to become a worldwide renowned company ranked as a premier multinational company. In addition, Eastman Kodak has been ranked amongst the 25 largest companies not only in the USA but throughout the world. With invention of Brownie and introduction of a paper rolling film in 1884, Eastman Kodak spurred to higher heights in the photographic industry (Charlene, 2008). Despite the death of George Eastman in 1932, George Fisher followed the footsteps of his predecessor thus making the firm what it is today.

The following is a case analysis of Eastman Kodak with emphasis on its industry, Photographic and Optical Equipment/Supplies. This analysis is on the prevailing competition, strategic characteristics, and various alternatives the corporation can take in order to continue being a leader in the industry. From the various alternatives presented in this case analysis, some recommendations are made, which are likely to spur the corporation into even higher levels that it is experiencing in the current 21st century.

Analysis of Industry and Competitors

Eastman Kodak (EK) is a firm operating under Photographic and Optical Equipment/Supplies Industry commonly referred to as Consumer Durables and Apparels. The following is an analysis of Photographic and Optical Equipment/Supplies Industry under which EK operates and its level of competition.

Industry and Market Segment

Photographic and Optical Equipment/Supplies Industry’s products are broadly categorized into five including equipments for taking still picture; motion picture equipment; chemicals for preparing photos; films, paper, plates, and cloths for sensitized photos; and equipment for photocopying and microfilming. Innovative technology has played a great role in enhancing the success of photographic equipments’ markets. For instance, with the new development of digital cameras and the One Time Use (OTU) cameras that are disposable, the market has significantly increased commanding huge number of sales as well as new entrants of firms to meet the growing demand (Congressional Budget Office). Amazingly, digital cameras outsold the traditional cameras in 2003 indicating the role of innovative technology in the industry as well as the markets. Exhibit 1 indicates a growth of 1.5% of the market as compared to previous years (Bureau of Economic Analysis n.d.). In addition, this exhibit indicates total revenue of approximately $ 20,726.90 million with a total of $ 11,057.80 million industry’s gross product coming from about 1,931 establishments and 2,124 enterprises. This indicates that the market is rapidly growing having approximately 86 firms.

Within this growing industry and its market there are about 86 companies that have contributed to such positive result. Consequently with the 86 firms in the industry competition has immensely grown leading to quality products through innovative technology that has seen development of digital cameras (Eastman Kodak, 2009). However, the main competitors to Eastman Kodak Company include Canon, Fujifilm, Hewlett-Packard, Ricoh, Sony, Xerox, Nikon, Olympus, Lexmark, and Seiko Epson Corporations amongst others. Exhibit 2 provides a brief overview of these corporations and how they are offering significant competition to Eastman Kodak within the industry. Exhibit 3 provides financial performance of five companies in Photographic and Optical Equipment/Supplies Industry, Kodak and four other main competitors. In Exhibit 3, ROA (Return on Assets) and RIC (Return on Invested Capital) are provided that give indication of a bad performance by Kodak in the latest years where the corporation has had negative values. In addition, Exhibit 4 shows the performance of Eastman Kodak by segments.

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Changing Elements

Innovative technology is the most emerging driver of this sector. The majority of goods developed by Eastman Kodak and other companies in this field are essentially influenced by innovative technologies (Consumers Union of U.S, 2009). This is why it was necessary to rock the industry with the advent of digital cameras, thereby commanding a larger share than that of conventional cameras. Therefore, most firms in this industry have been able to reach out the market through advancements of technology. Imaging and photographic has taken a different direction especially in the 21st century hence the need for creativity and innovativeness.

SWOT Analysis for Eastman Kodak

  • Opportunities

Exhibit 14 (a) shows the opportunities that Eastman Kodak enjoys against its competitors. Amongst the opportunities enjoyed include financial markets where it is possible for the corporation to raise money through debts owing to its large assets, emerging markets especially with regards to different age groups being so much involved in taking photographs, innovation especially with developing technology, online selling and buying of products, and also product services expansions. From Exhibit 4 the main segment that provides a good opportunity for Eastman Kodak is the consumer imaging. Compared to other segments, Consumer Imaging Segment attracted a lot of revenue in terms of sale during the fiscal year 2010 (Dobbin, 2009). Within Consumer Imaging Segment the main areas that portray good trading grounds for Eastman Kodak are interchangeable lens camera and lenses for ILC. This is because over the last fiscal year they recorded the highest level of growth with interchangeable lens camera recording up to 30.0% and approximately 34% respectively as shown in Exhibit 5 (FactSet Research Systems, 2009). Another opportunity is with regards to the power of supplies.

  • Threats

According to Exhibit 14 (b), Eastman Kodak suffers significantly from high levels of competition, cheap technology, economic recession, lower cost for competitors or imports, maturing categories, products and services, as well as price wars and product distribution. These have posed great threats to the firm leading to bad performances it has achieved within the last few years. Competition has been due to the high power of entrants as well as intensity of rivalry and substitutes. This poses a great threat to Kodak as there will be more firms entering the industry. As a result the poor record seen within the previous years is likely to be repeated. It is therefore obvious that with such increase in new firms and substitutes there is likely to be split within the market share hence affecting Eastman Kodak significantly. There is therefore serious need to have proper, efficient, and effective measures that should be put in place in order to retain the already existing customers (Dobbin, 2009).

  • Strengths and Weaknesses

Other than opportunities and threats discussed above, Eastman Kodak enjoys many strengths coupled with some weaknesses. Some of the strengths include meaningful brand recognition especially given that it has been in the market for over a century, diversified geographic base after establishment of various subsidiaries and enterprises, and cross licensing agreement. Its weaknesses include lack of product and weak financial performance. Lack of product arises when Eastman Kodak produces products hurriedly after its competitors have produced. This makes the company’s products similar to those of the competitors hence there is no striking feature differentiating it from other products hence creating that uniqueness that is required by most consumers. In addition, quality is compromised in the process of hurriedly manufacturing and developing products on the basis of other products.

Part 2: Strategic Characteristics of Eastman Kodak

Analysis of Company

Business Model

            Market Positioning: Kodak has targeted consumers who are adult and post baccalaureate of about 25 to 40 years of age, actively involved in various activities, having so much passion about relationships and friendships, and with a lot of interest in capturing images both still and motional. This market segment is very rich as majority of people between the ages of 25 and 40 are far much active in taking images and sharing the same through various digital devices. In addition, its market position has focused on the marketing philosophy that states “Kodak is preferred by adults who are active, busy and care about meaningful relationships and want to encapsulate and share important moments in their lives, because Kodak’s products enable them to capture, share, display, and store pictures and create keepsakes, with more ease than competitors like Canon, Nikon, and Fujifilm”.

            Products: Eastman Kodak’s main products are within the four segments as portrayed in Exhibit 4. Nevertheless, Kodak as a firm has failed to provide products that distinguish benefits to consumers. Most of its products are produced in haste as a result of pressure from competitors and this leads to poor quality products. Consequently the firm suffers reduction in the market share hence profitability as indicated in the financial statements from Exhibits 7 to 10; income statements, balance sheet, cash flow statement, and ratio analysis respectively. A lot of risks thereby face products manufactured in this kind of manner. For instance, there is a possibility that such products may have some defects in them and this discourages consumers from purchasing the same.

            Pricing: Applying the economic value pricing indicated in Exhibit 11, Kodak has been able to price most of its products. In this case, Kodak struggles to deliver products while that provides a demand for price premium over its competitors. For instance, most of the cameras offered by Kodak range between $ 80 and $ 160 while its competitors sell the same models of cameras for a record price of between $ 110 and $ 500 (Kavajecz, 2009). Kodak enjoys the benefit of four of its products being ranked amongst the top nine cameras that are doing very well in the market. Exhibit 12 provides comparison of pricing by Eastman Kodak Corporation.

Placement: Kodak placement is almost similar to that of its competitors. There are products that are sold through the website while others are distributed to consumers through various distributional channels available in the industry. Most of the products sold directly by Eastman Kodak through its websites are digital cameras, inkjet printers, and digital picture frames owing to the fact that they are very sensitive.

The key strategic issue with regards to Eastman Kodak Company is the fact that they manufacture products hurriedly after their competitors. This is due to lack of proper innovative and inventive strategies. Consequently Eastman Kodak Company should have more people brought on board to work on innovative and inventive technology, which will help in creating unique products of high quality.

Marketing and Promotional Strategies

Eastman Kodak firm employs various strategies to ensure that they retain existing consumers while attracting others (Kodak, 2009). The following are some of the strategies employed by Eastman Kodak firm;

  • Understanding of the consumers through market research that helps in creating variety of products to fit various needs and classes.
  • Developing attainable and specific marketing objectives such as increasing sales, which is the ultimate objective for the firm.
  • Reselling analysis through ensuring that consumers are always directly linked to their preferred retailers so as to acquire products of their choices.
  • Kodak has efficient and effective marketing communications that is focused at triggering emotions hence providing arguments that favor some of the products they manufacture in a bid to have a better brand name.

Part 3: Alternatives and Recommendations

There are various alternatives that Eastman Kodak can employ in order to attract more customers and retain existing ones thereby achieving higher profits. Some of those strategies include;

  • Reducing middlemen along their distribution channels to make the end product cheaper
  • Increase research and development for enhancing innovative technology, which will assist in coming up with new products
  • Setting up more subsidiaries in countries that they have not ventured.
  • Increasing the time taken to produce a product so as to minimize various defects associated with hurriedly made products
  • There is need to employ more people within product development as well as quality assurance department.

Recommendation

In conclusion, looking at all the above alternatives they are all viable even though some are costly in terms of expenses hence are likely to cause an increase in costs of sales. The best alternative amongst the aforementioned ones therefore is for Eastman Kodak Company to engage in research and development that will improve their inventive and innovative technology for the purposes of developing products that are unique and of high quality.

Appendices

Exhibit 1: Photographic and Optical Equipment/Supplies Industry Market

Industry Indicator 2010
Industry Revenue $ 20,726.90 million
Revenue Growth 1.5%
Industry Gross Product $ 11,057.80 million
Number of Establishments 2,124
Number of Enterprises 1,931
Employment 88,991
Total wages $ 4,435.5 million
Market Capitalization 54 billion
Net Profit Margin  3.6%
Return on Equity 6.2%
Dividend Yield 3.3%

Exhibit 2: Eastman Kodak Competitors’ Brief Profile

Competitor Brief Profile
Canon Inc. v Manufactures business machines, cameras, and optical products.v Acquired 24% stake in Hitachi Displays on March 31, 2008.v 9 months up to September 30, 2009 Canon’s revenue decreased by 27%.v Net Income decreased by approximately 76%v Revenues reflect low sales volume from business machinesv High costs of sales and SGA (selling, general and administrative) expenses
Fujifilm Holdings Corporation v Japan-based company providing imaging, information, and document solutions operating 3 business segments; Imaging Solution Segment, Information Solution Segment, and Document Solution Segmentv Imaging Segment offers color films, digital cameras, color papers, and chemicals for instant printing amongst othersv Information Segment offers medical systems, graphic system, life-science machinery, electronic components, and optical devices amongst others.v Document Segment offers paper, copy machines, office printers, and other consumable goods within the office.v For 6 months running up to September 30, 2009 corporations revenues decreased by 22% reflecting decreased sales from all business segmentsv Higher percentage of costs of sales and SGA expenses
Hewlett-Packard Co. v Provider of products, technologies, software, solutions and services to individual consumers, SMEs, and large corporationsv Operations organized into 7 segments in 2008 fiscal year; Enterprise Storage and Servers; Imaging and Printing; Personal Systems; HP Software; HP Services; HP Financial Services; and Corporate Investmentsv Revenues decreased by 3 in 2008 fiscal year reflecting low sales from all products and services
Sony Corporation v Develops, designs, and manufactures various kinds of electronic equipment, devices, and instruments.v Operates in 5 segments; Electronics; Games; Pictures; Financial; and All Other segmentv Bertelsmann acquired 50% interest on Sony BMG Music Entertainment on October 1, 2008.v For financial year ending 2009 revenues decreased by 20%
Nixon v Japan-based company manufacturing optical productsv Operates in 4 business segments; Precision Apparatus; Image Segment; Instruments Segment; Others Segmentv Has 65 subsidiaries and 10 associated companiesv August 19, 2009

Exhibit 3: Performance of Eastman Kodak in Comparison to Competitors

Kodak

5 yr Av 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001
ROA -4.9% -9.7% -2.8% -6.4% -1.5% -4.1% -9.0% 0.5% 1.7% 5.2% 0.6%
RIC  -33.1% -111.4% -14.1% -22.3% -4.9% -13.1% -25.3% 1.4% 5.0% 16.3% 1.7%

 

Fuji

ROA 1.1% 2.4% -1.4% 0.3% 3.0% 1.1% 1.2% 2.8% 2.7% 1.7% 2.9%
RIC 1.6% 3.5% -2.0% 0.5% 4.5% 1.6% 1.8% 4.4% 4.4% 2.8% 4.7%

Hewlett-Packard Co

ROA 7.7% 7.3% 6.7% 8.2% 8.5% 7.8% 3.1% 4.7% 3.6% -1.8% 1.9%
RIC 16.4% 15.8% 15.1% 18.5% 17.3% 15.3% 5.8% 8.1% 5.9% -3.1% 3.5%

Nixon Co

ROA 4.4% 3.6% -1.8% 3.5% 9.1% 7.7% 4.4% 3.9% 0.4% -1.5% -1.1%
RIC 8.1% 6.4% -3.0% 6.2% 16.4% 14.8% 8.5% 7.0% 0.7% -3.0% -2.4%

Sony Corporation

ROA 0.2% -2.1% -0.3% -0.8% 2.9% 1.1% 1.2% 1.8% 1.0% 1.4% 0.1%
RIC 0.0% -7.4% -1.1% -2.5% 8.2% 3.1% 3.3% 5.0% 2.9% 3.8% 0.3%

Exhibit 4: Kodak Performance by Segments 

Segment Sales   Dec10 Dec-9 Dec-8 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 Dec-02 Dec-01
Consumer Imaging 2,739 2,619
Graphic Communication 2,681 2,726 3,334 3,590.0 3,632.0 2,990.0 724.0
Film, Photofinishing 1,767 2,257 2,987
Other 0.0 4.0 7.0 112.0 69.0 163.0 118.0
Historical Segments 3,088 6,599 9,573 11,115 12,675 13,317 12,732 13,124
Total   7,187 7,606 9,416 10,301 13,274 14,268 13,517 13,317 12,732 13,124

Kodak Company Case Study Analysis

Exhibit 5: Forecasting for 2011 for Eastman Kodak

  Actual for 2010 Year on Year Change Forecast for 2011 Year on Year Change
Digital Cameras (total) 121.5 14.7% 131 7.8%
Interchangeable Lens Camera 12.9 30.0% 15.5 20.2%
Built-In Lens Camera 108.6 13.2% 115.5 6.4%
Lenses for ILC 21.7 34.8% 26.4 21.7%

Exhibit 6: Porter Analysis of Eastman Kodak

Kodak Company Case Study Analysis

Exhibit 8: Income Statement

Figures in $ ‘000.

Period Ending Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Total Revenue 8,091,000   8,101,000   9,416,000  
Cost of Revenue 5,236,000   5,838,000   7,247,000  
Gross Profit 1,951,000   1,768,000   2,169,000  
Operating Expenses
Research Development 321,000   356,000   501,000  
Selling General and Administrative 1,896,000   1,214,000   1,583,000  
Non Recurring 70,000   226,000   906,000  
Others –   –   –  
Total Operating Expenses –   –   –  
Operating Income or Loss (336,000) (28,000) (821,000)
Income from Continuing Operations
Total Other Income/Expenses Net 26,000   36,000   55,000  
Earnings Before Interest And Taxes (412,000) 2,000   (766,000)
Interest Expense 149,000   119,000   108,000  
Income Before Tax (561,000) (117,000) (874,000)
Income Tax Expense 114,000   115,000   (147,000)
Minority Interest –   (1,000) –  
Net Income From Continuing Ops (675,000) (227,000) (727,000)
Non-recurring Events
Discontinued Operations (12,000) 17,000   285,000  
Extraordinary Items –   –   –  
Effect Of Accounting Changes –   –   –  
Other Items –   –   –  
Net Income (687,000) (210,000) (442,000)
Preferred Stock And Other Adjustments –   –   –  
Net Income Applicable To Common Shares (687,000) (210,000) (442,000)

 

Exhibit 9: Balance Sheet

Figures in $ ‘000.

Period Ending Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Assets
Current Assets
Cash And Cash Equivalents 1,624,000   2,024,000   2,145,000  
Short Term Investments –   –   –  
Net Receivables 1,379,000   1,516,000   1,830,000  
Inventory 696,000   679,000   948,000  
Other Current Assets 100,000   84,000   81,000  
Total Current Assets 3,799,000   4,303,000   5,004,000  
Long Term Investments –   –   59,000  
Property Plant and Equipment 1,037,000   1,254,000   1,551,000  
Goodwill 294,000   907,000   896,000  
Intangible Assets –   –   257,000  
Accumulated Amortization –   –   –  
Other Assets 1,109,000   1,227,000   906,000  
Deferred Long Term Asset Charges –   –   506,000  
Total Assets 6,239,000   7,691,000   9,179,000  
Liabilities
Current Liabilities
Accounts Payable 1,302,000   942,000   2,497,000  
Short/Current Long Term Debt 50,000   62,000   51,000  
Other Current Liabilities 1,481,000   1,892,000   914,000  
Total Current Liabilities 2,833,000   2,896,000   3,462,000  
Long Term Debt 1,195,000   1,129,000   1,119,000  
Other Liabilities 3,286,000   3,699,000   3,637,000  
Deferred Long Term Liability Charges –   –   –  
Minority Interest 2,000   2,000   –  
Negative Goodwill –   –   –  
Total Liabilities 7,316,000   7,726,000   8,218,000  
Stockholders’ Equity
Misc Stocks Options Warrants –   –   –  
Redeemable Preferred Stock –   –   –  
Preferred Stock –   –   –  
Common Stock 978,000   978,000   978,000  
Retained Earnings 4,969,000   5,676,000   5,879,000  
Treasury Stock (5,994,000) (6,022,000) (6,048,000)
Capital Surplus 1,105,000   1,093,000   901,000  
Other Stockholder Equity (2,135,000) (1,760,000) (749,000)
Total Stockholder Equity (1,077,000) (35,000) 961,000  
Net Tangible Assets (1,371,000) (942,000) (192,000)

 Exhibit 10: Cash Flow Statement

Figures in $ ‘000.

Period Ending Dec 31, 2010 Dec 31, 2009 Dec 31, 2008
Net Income (687,000) (210,000) (442,000)
Operating Activities, Cash Flows Provided By or Used In
Depreciation 378,000   427,000   500,000  
Adjustments To Net Income 650,000   (194,000) 518,000  
Changes In Accounts Receivables 118,000   363,000   148,000  
Changes In Liabilities (580,000) (821,000) (720,000)
Changes In Inventories (28,000) 276,000   (20,000)
Changes In Other Operating Activities (70,000) 22,000   169,000  
Total Cash Flow From Operating Activities (219,000) (136,000) 153,000  
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures (149,000) (152,000) (254,000)
Investments 4,000   3,000   12,000  
Other Cash flows from Investing Activities 33,000   127,000   54,000  
Total Cash Flows From Investing Activities (112,000) (22,000) (188,000)
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid –   –   (139,000)
Sale Purchase of Stock –   –   (301,000)
Net Borrowings (62,000) 63,000   (291,000)
Other Cash Flows from Financing Activities –   –   –  
Total Cash Flows From Financing Activities (74,000) 33,000   (731,000)
Effect Of Exchange Rate Changes 5,000   4,000   (36,000)
Change In Cash and Cash Equivalents (400,000) (121,000) (802,000)

 Exhibit 11: Ratio Analysis

5 Yr AVG ‘10 ‘09 ‘08 ‘07 ‘06 ‘05 ‘04 ‘03 ‘02 ‘01
Valuation
Price/Earnings 115.2x 30.9x 14.7x 113.2x
Price/Sales 0.3x 0.2x 0.1x 0.2x 0.6x 0.6x 0.5x 0.7x 0.6x 0.8x 0.6x
Price/Book Value 1.8x 2.1x 5.3x 2.9x 2.4x 2.3x 3.6x 3.0x
Price/Cash Flow 12.1x 20.0x 7.8x 5.6x 7.9x 4.5x 4.6x 4.1x
Enterprise Value/EBIT 11.3x 3.0x 2.7x 11.1x 24.5x 15.3x 15.5x 12.6x 9.2x 8.9x 9.2x
Enterprise Value/EBITDA 2.6x 1.5x 0.5x 1.6x 5.0x 4.6x 4.4x 5.6x 5.1x 5.5x 5.3x
Enterprise Value/Sales 0.3x 0.1x 0.0x 0.1x 0.5x 0.7x 0.6x 0.8x 0.7x 0.9x 0.9x
Total Debt/Enterprise Value 1.5x 1.2x 4.1x 1.4x 0.3x 0.3x 0.4x 0.2x 0.3x 0.2x 0.3x
EPS (recurring) -0.33 -0.54 -0.38 -1.28 0.72 -0.16 -1.70 2.25 2.42 2.85 2.40
EPS (basic) -1.55 -2.56 -0.80 -1.57 -0.71 -2.09 -4.70 0.28 0.83 2.38 0.26
EPS (diluted) -1.95 -2.51 -0.87 -3.59 -0.71 -2.08 -4.70 0.28 0.83 2.38 0.26
DPS 0.00 0.50 0.50 0.50 0.50 0.50 1.15 1.80 1.77
Profitability
Gross Margin 25.1% 27.1% 23.2% 23.0% 24.4% 27.6% 28.4% 30.6% 32.7% 36.0% 34.5%
SG&A to Sales 22.4% 22.2% 21.8% 22.1% 22.3% 23.3% 24.4% 24.6% 25.1% 25.4% 25.2%
Operating Margin 2.7% 4.9% 1.4% 0.9% 2.0% 4.3% 3.9% 6.1% 7.7% 10.6% 9.3%
Pretax Margin -4.7% -7.8% -1.5% -9.2% -2.4% -2.6% -5.7% -0.9% 1.8% 8.3% 1.3%
Net Margin -5.3% -9.4% -3.1% -7.7% -2.0% -4.5% -9.5% 0.6% 1.8% 5.4% 0.6%
Return on Assets -4.9% -9.7% -2.8% -6.4% -1.5% -4.1% -9.0% 0.5% 1.7% 5.2% 0.6%
Return on Equity -50.3% -36.4% -9.3% -32.7% -44.4% 2.3% 7.9% 24.5% 2.4%
Return on Total Capital -30.7% -102.0% -13.6% -21.1% -4.7% -12.0% -22.6% 1.3% 4.0% 12.1% 1.2%
Return on Invested Capital -33.1% -111.4% -14.1% -22.3% -4.9% -13.1% -25.3% 1.4% 5.0% 16.3% 1.7%
Basic DuPont ROE (3 Step) -1.5% 121.4% -50.3% -36.4% -9.3% -32.7% -44.4% 2.3% 7.9% 24.5% 2.4%
Extended DuPont ROE (5 Step) -1.5% 121.4% -50.3% -36.4% -9.3% -32.7% -44.4% 2.3% 7.9% 24.5% 2.4%
Efficiency
Net Income/Employee -0.02 -0.04 -0.01 -0.03 -0.01 -0.01 -0.03 0.00 0.00 0.01 0.00
Receivables Turnover 5.0x 5.4x 4.9x 5.2x 4.5x 4.9x 5.4x 5.5x 5.8x 5.6x 5.3x
Days of Sales Outstanding 73.8 67.4 74.6 70.8 81.6 74.6 67.8 66.6 63.4 65.0 68.8
Inventory Turnover 7.4x 7.6x 7.2x 7.7x 7.3x 7.2x 7.8x 8.4x 8.4x 7.5x 6.1x
Days of Inventory on Hand 49.4 47.9 50.9 47.6 50.3 50.5 46.7 43.5 43.5 48.9 60.1
Payables Turnover 5.2x 5.6x 5.0x 3.0x 3.3x 9.4x 11.3x 11.1x 11.5x 11.7x 10.8x
Days of Payables Outstanding 82.3 65.2 72.3 123.1 111.7 39.0 32.3 32.8 31.6 31.3 33.6
Cash Conversion Cycle (Days) 41.0 50.1 53.2 -4.6 20.3 86.1 82.2 77.2 75.3 82.6 95.3
Total Asset Turnover 1.0x 1.2x 1.0x 1.0x 0.8x 0.9x 0.9x 0.9x 0.9x 1.0x 1.0x
Working Capital Turnover 9.6x 7.4x 5.4x 6.1x 6.4x 22.7x 23.5x 20.5x 90.0x -15.2x -19.7x
Liquidity
Current Ratio 1.35 1.34 1.49 1.45 1.36 1.12 1.11 1.13 1.03 0.84 0.87
Quick Ratio 1.11 1.10 1.25 1.17 1.15 0.88 0.85 0.90 0.83 0.65 0.66
Cash Ratio 0.57 0.57 0.70 0.62 0.66 0.30 0.31 0.25 0.24 0.11 0.08
Credit Analysis
Net Debt/EBITDA -0.8x -0.5x -1.6x -1.4x -1.4x 0.7x 1.0x 0.6x 1.1x 0.9x 1.3x
Net Debt/(EBITDA-Capex) -1.3x -0.7x -2.2x -2.6x -1.9x 0.8x 1.3x 0.8x 1.5x 1.3x 2.0x
Total Debt/EBITDA 1.9x 1.7x 2.2x 2.2x 1.6x 1.5x 1.8x 1.3x 1.8x 1.2x 1.5x
EBITDA/Interest Expense 6.2x 4.9x 4.5x 5.4x 8.7x 7.3x 9.3x 11.0x 12.5x 12.6x 9.8x
EBIT/Interest Expense (Int. Coverage) 1.6x 2.4x 0.9x 0.8x 1.7x 2.2x 2.6x 4.8x 6.8x 7.8x 5.0x
CFO/Interest Expense 1.0x -1.5x -1.1x 1.4x 2.8x 3.6x 5.7x 7.0x 11.1x 12.7x 9.4x
LT Debt/EBITDA 1.7x 1.6x 2.1x 2.1x 1.3x 1.4x 1.4x 1.0x 1.2x 0.5x 0.8x
LT Debt/Equity -593.7% -111.0% -3,225.7% 130.3% 42.6% 195.5% 140.5% 48.6% 70.5% 41.9% 57.6%
LT Debt/Total Capital 191.5% 711.3% 97.7% 55.3% 27.9% 65.1% 47.1% 30.2% 35.4% 21.6% 27.3%
LT Debt/Total Assets 15.2% 19.2% 14.7% 13.6% 9.4% 19.0% 18.5% 12.6% 15.5% 8.7% 12.5%
Total Debt/Total Equity 135.6% 52.7% 200.1% 157.0% 60.8% 99.5% 93.8% 110.6%
Total Debt/Total Assets 16.1% 20.0% 15.5% 14.2% 11.7% 19.4% 23.5% 15.7% 21.9% 19.5% 23.9%
Net Debt/Total Capital -66.8% -225.6% -73.1% -37.2% -29.2% 31.0% 32.4% 17.3% 30.5% 37.7% 45.1%
Total Debt/Total Capital 200.6% 741.1% 103.0% 57.6% 34.5% 66.7% 61.1% 37.8% 49.9% 48.4% 52.5%
Net Debt/FFO -7.6x -1.1x -35.2x -1.0x -2.7x 1.8x 3.3x 0.9x 1.4x 1.3x 1.5x
LT Debt/FFO 11.7x 3.5x 47.0x 1.4x 2.5x 3.9x 4.8x 1.5x 1.6x 0.8x 0.9x
FCF/Total Debt -0.1x -0.3x -0.2x -0.2x -0.1x 0.2x 0.2x 0.2x 0.2x 0.4x 0.2x
CFO/Total Debt 0.1x -0.2x -0.1x 0.1x 0.2x 0.3x 0.3x 0.5x 0.5x 0.8x 0.6x

Exhibit 12: Pricing Strategy

Exhibit 13: Comparison of Pricing

Overall Rank Brand Line Model Family Price Score Price Relative to Kodak
1 Canon PowerShot SX10 IS Super zoom 390 78 56.00%
2 Canon PowerShot SX1 IS Super zoom 550 75 120.00%
4 Casio Exilim EX-H10 Super zoom 300 73 20.00%
5 Casio Exilim EX-FH20 Super zoom 400 73 60.00%
6 Fujifilm Finepix F70 EXR Super zoom 240 72 -4.00%
7 Kodak EasyShare Z950 Super zoom 250 72 0.00%
8 Sony Cyber-shot DSC-H20 Super zoom 280 72 12.00%
16 Samsung HZ10W Super zoom 230 69 -8.00%
21 Olympus Stylus 9000 Super zoom 230 68 -8.00%
Max -8.00%
Min 120.00%
Range 128.00%
Avg 31.00%

Exhibit 14: SWOT Analysis

Exhibit 14 (a): Analysis of Opportunities and Threats

Exhibit 14 (b): Analysis of Strengths and Weaknesses

Exhibit 14 (c): Combined SWOT

References
  • Bureau of Economic Analysis. National Economic Accounts. Retrieved on November 13, 2011 from http://www.bea.gov/national/index.htm#gdp
  • Charlene, B. (2008). Talking with the Groundswell. In J. B. Charlene Li., Groundswell. Boston, MA: Harvard Business School Publishing Corporation.
  • Congressional Budget Office. Appendix A – CBO’s Economic Projections for 2009 to 2019. Retrieved on November 13, 2011 from http://www.cbo.gov/ftpdocs/100xx/doc10014/AppendixA.7.2.shtml
  • Consumers Union of U.S. (2009). Retrieved on November 13, 2011 from http://www.consumerreports.org
  • Dobbin, B. (2009). Retrieved on November 13, 2011 from http://www.huffingtonpost.com/2009/01/29/kodak-to-slash-up-to-4500_n_162133.html
  • Eastman Kodak. (2009). Filings and Annual Reports. Retrieved on November 13, 2011 from https://www.capitaliq.com
  • FactSet Research Systems. (2009). Fact Set Fundamentals 2009.4A.
  • Google. Eastman Kodak Company Financials. Retrieved on November 13, 2011 from http://www.google.com/finance?q=NYSE:EK&fstype=ii
  • Kavajecz, K. (2009). Module 5, Risk, Returns and the Capital Asset Pricing Model. Madison, WI.
  • Kodak, E. (2009). About Kodak. Retrieved on November 13, 2011 from www.kodak.com

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