back to article Shareholders hoping to squeeze cash from Kodak are deluded, says court

Kodak shareholders aren't going to get the chance to set up a committee to represent their interests in the reorganisation of the bankrupt firm. Investors in the bust camera firm were trying to get a US bankruptcy judge to allow them to set up the committee, after hearing of the current reorganisation plan, which would see them …

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The pension scheme for Kodak workers is probably worth robbing, it's been done to other companies that folded as it's usually the last substantial asset left standing after the top knobs have taken their golden parachute bonuses for driving the company into extinction so competently (see the US Hostess corporation for a recent example). The Kodak shareholders group and their advocati* were probably hoping the judge would let them get at the pension fund with the long knives and fuck the retirees. Good on the judge (for once).

*Advocati -- an oily bottom-feeding scum-sucking fish with no backbone.

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@Robert Sneddon

I have to agree with you. I also wish to record my personal sadness that a company which once rode high in the photography and document processing areas managed to lose the plot so decisively. No doubt the Golden Knobs stand proud of their achievement, but perhaps the shareholders deserve a (dis)honourable mention for watching this ship sink into its specially created sunset without taking sufficient corrective action. Activist shareholders have a bad name for being wealth destroyers, (except for their own wealth). Where are the real activist shareholders that economies need who will blast useless self serving wreckers out of their complacency?

As a pensioner of a different, but now also destroyed company I respect the Judge for seeking to protect those whose interests rarely receive attention. If only the wealth destroyers could be brought to book for their failure to perform in the long term interests of the company for whom they were supposed to work.

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Re: @Robert Sneddon

There were activists shareholders at Kodak. They were loudly opposed to a strong move into digital photography and wanted the company to break up and return the investment dollars, with a nice profit on top of course.

They ended up destroying not only the company, but any return they might have seen were it not for their interference. Now they're whinging because their own actions cost them money. The judge is absolutely correct in this.

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Re: @Robert Sneddon

Photographer here :-) I actually tried some of the early kodak dslr's and followed them keenly. For a while I felt they were closer to being a sane proposition than canon or nikons but they stalled. Canikon accelerated away. Kodak didn't have it's own range of glass and they used a nikon mount (later added a canon mount), if they had put the money in to building an entire system (or paid zeiss to do it) and pushed harder they could have made it. The had the sensor tech, they had the money, they just died under their own weight.

Going back to the start of the pro dslrs it was relatively obvious they were the future. They had huge issues but there were being ironed out. Once kodak was sat there is a 14mp full frame camera it was very clear it was only a matter of a few years before 35mm and medium format would be at risk. Rather than keep developing and develop their own mount and lenses they continued to license their direct competitors mounts. They were too timin so they got smashed.

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Re: @Robert Sneddon

IMHO I believe Kodak's major failing was the fact that they had no digital camera manufacturing abilities - Kodak always used third-party suppliers for their digital camera business. For the SLR's they built on Nikon bodies, for the compact point-and-shoots they used Chinon.

This was a MAJOR mistake. The early digital market was point and shoots, as dSLR's were simply too expensive to even resemble "mass market", but Chinon was in no real condition to compete once Nikon, Canon and Sony got into the market. For a while, Kodak was just about the only major name brand player in town, in regards to digital compacts, so people bought the Kodak products. Once Nikon and Canon started up their own product lines, however, Chinon, and therefore Kodak, were not equipped to compete - Chinon's tech stagnated and by the time Kodak fully integrated Chinon into itself, in 2004, it was too little, too late.

Kodak did itself no favors by having only a strategic agreement with Chinon in the early years rather than do everything in-house.

Then again, now that I think about it more, Kodak lost its compact camera design mojo by the 1970's and maybe this was inevitable, considering the wholesale industry paradigm shift that digital brought which killed photographic supplies sales and shifted the market to (almost) completely hardware based.

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Re: @Robert Sneddon

True, one advantage kodak (at least over nikon which even now at best only designs its sensors, most are tweaks to sony sensors, albeit good ones) had was in sensor design and manufacturing. Initially I'm sure it made sense to work with nikon but anybody with half a brain could see kodak needed independance from Nikon. They could hve just bought minolta and had the body, mount and af tech \ patents required to roll their own entirely inhouse. From what I have read there was strong internal resistance to a full on digital onslaught. Even sadder is that the execs creating that resistance have likely long since retired with generous private pensions.

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Re: @Robert Sneddon

Well, Kodak used to have their own glass, but they dropped it. Their glass used to be supreme, and it was rated as being better than Zeiss. Unfortunately, like too much Kodak does, they dropped their Ektar lenses. They're a *film* company, not a camera company. (sigh...)

Kodak has been selling off their jewels and profitable bits for decades, so don't blame it all on the current gang of idiots. Eastman Chemical is doing just fine. Kodak has had plenty of fantastic patents. They sold off everything because they're a *film* company, not a digital technology company. And now they aren't selling that much film. Their industrial document printers are fabulous, but that's not enough for them.

Film is still amazingly profitable for them, but it's just not generating enough revenue to prop up all of the other parts of the company that are dead weight.

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And this is why the economy got into such a mess - a view that there's only upside risk and that The Man will deal with any downside.

As it turned out we're all The Man having to bail everything out left, right, and centre. Good to see that some people recognise that there's actually risk in risk.

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"The value of your shares may go down as well as up."

Tough.

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Activist Investors can all go to hell along with Fiorina and Perez

The fall of Eastman Kodak is reason why no group or individual investors should ever be able to get enough power to influence the operational direction of a company like Kodak. Kodak was one of the greatest pure R&D companies ever, responsible for huge discoveries and innovations and their shareholders crippled those capabilities not once but several times. They raped the business and employees by breaking up the deliberate vertical manufacturing that made Kodak so good at what it did. They made the photographic paper, emulsions, chemicals and all their percursors all in one city and on one property. If they had not been hoodwinked by their investors and USING THE SAME VERTICAL PHILOSOPHY gone full tilt into the digital photography MANUFACTURING business they would be a powerhouse today. Hell they could have BOUGHT a Nikon or Canon back then. Protecting your intellectual property instead of selling it off might have helped.

This is why Daniel Loeb needs to be permanently muzzled (surgically with staples), Carl Icahn needs to be castrated then burned at the stake in a pile of his own money as should any other hedge fund/corporate, pension raiding, selfish, attention whore.

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Re: Activist Investors can all go to hell along with Fiorina and Perez

Whilst I agree with your last paragraph as much as is possible with Dave's minions throwing me in court, I was led to believe it was executives within kodak (in the traditional print divisions) that were resistant to an onslaught in digital. I agree entirely it's what they needed. The issue with shareholders and restricting the is whilst you would prohibit a shareholder from doing something bad, it would also prevent a shareholder from stopping the company doing something bad.

It amazes me that execs \ ceo's are paid a literal fortune to direct a company (with the board) yet they can screw up badly and walk away retaining all the wealth? Maybe if their personal service contracts required they use the company pension fund and if their bonuses for performance could be clawed back if its later found they were utter morons.

Kodak was an amazing company and it's tragic to see them reduced to this. They had the capacity to succeed, just inhouse bickering and dick waving sank them.

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Re: Activist Investors can all go to hell along with Fiorina and Perez

Seems to me that 20th century Kodak, while generally well-run, was made possible by the obscene margins it made on emulsions/photographic paper/etc, combined with the marketing that made it a near-monopoly in the US and many other countries.

I don't see any way that manufacturing razors (digital cameras) where the blades are essentially free (reusable flash storage) could have resulted in anywhere near similar profit margins. It would have been nice to still have a much-shrunken Kodak around for the Rochester tourist industry, but there's no way it could have produced the profits that sustained so many (and Rochester!) during the 20th century.

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Re: Activist Investors can all go to hell along with Fiorina and Perez

Canon \ Nikon \ Sony (at least their camera division) do alright :-) It's more than just a camera body. It's lenses, flashes, teleconvertors, extension tubes, flash triggers, support contracts \ cps membership, hell even memory cards \ tripods and bags.

Whilst what you are saying sounds logical, as others have commented above despite the influx of digital kodak still makes coin on films, soup and paper. Kodak not jumping onto digital was not going to stop minolta, canon, nikon et al, all it did was leave kodak out in the cold. The writing was on the wall from the early days, as prices dropped and quality and functionality improved, digital would increasing eat into film. I love film but digital kicks it's ass in many ways in both commercial and consumer settings. If kodak was the only camera company the logic might hold, but they weren't and it was obvious where it would end.

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Re: Activist Investors can all go to hell along with Fiorina and Perez

RS,

I had a number of friends at Kodak, went to some of their big marketing conferences, sold them instruments and valves for years until the fools ruined it for themselves.

The issue was a combination of "con-sultants" (emphasis on CON) fat, dumb and happy upper management that did not understand digital and investor ignorance.

Their shareholders "thought" they were doing the right thing by 'not taking any risks" when that was EXACTLY what was needed to jump into digital and since they controlled the film market they could have done similarly with digital. I agree with other posters that their inexpensive offerings sucked. What they needed was a design group that was not right out of "Madmen" because that is close to the Kodak management environment.

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Sad to see the final whimpers of a once-iconic company...

And to remember how I cursed at the incompetent executives every time I read an article recounting Kodak's flailing attempts over the past 20 years. I still remember trying (and failing!) to convince a good friend NOT to use one of Kodak's stock price drops in the '90s as a buying opportunity for his and his wife's retirement investment account...

At least Eastman Chemical is still around and doing fine, last I heard.

I used to work down the street from Polaroid's Cambridge, MA, headquarters and jog by its Art Deco riverfront building during the '90s. Another Kodak-like story, but one that developed (!) in a shorter time :)

Here's an unintentionally ironic news story dating from peak-Polaroid times: http://articles.chicagotribune.com/1986-03-16/business/8601200293_1_instant-cameras-instant-imaging-polaroid-stock

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I owned a mid- noughties Kodak digital camera....

...... and to say it was utter craps is probably giving it too much praise.

Too little

Too late

Too badly designed and made.

RIP

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Re: I owned a mid- noughties Kodak digital camera....

All digital cameras from that era were horrendous, Kodak had no monopoly on that. Besides, Kodak didn't even provide much of the equipment, the licensed it from Sony, Nikon and a few other specialty manufacturers. They did some great work with color processing software embedded in the cameras, but they were held back by the limitations of the hardware.

I didn't drop my Mamiya medium format film stuff until 2011. Digital cameras have only recently caught up with what a real film camera and film could do. Most people have just never seen what an ultra high quality transparency looked like so digital has suited them well. I still prefer to view transparencies on a light box, but the film is simply too hard to find anymore. It's sad really.

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Re: I owned a mid- noughties Kodak digital camera....

Well said. All compacts were abysmal then, kodak had a great dslr line they just didn't push hard enough.

Like Don I kept using my rz67 commercially until the 5d2 \ 1ds3 came out. Others jumped earlier and I still shoot some film (others still shoot only film) but depending on what you wanted digital took a long time to mature. The fact that digital p&s's for vaguely sane prices existed at all 10 years ago is pretty good but they were generation 1.0.

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Oh dear, how sad, never mind

Welcome to the world of the gift voucher purchaser, suck it up. How many gamblers do you see walk back into the bookies demanding their money back after their horse loses.

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