Professor Elam

Tuesday Sept 27, 2011

Eastman Kodak used to be one of the Dow's Bluest Chips-no more. Monday EK shed a quarter of its diminishing stock value.  Its bonds trade for 47 cents on the dollar. 

We are studying financial statements in class. You have heard me say that the cash flow statement is the most important of the bunch. Take a look at EK's Cash Flow Statement. As the saying goes, what's wrong with this picture. EK is not generating cash from any of its sources. The bonds have sold off because investors fear EK will run out of cash and not be able to re-finance its debt or pay creditors. 

EK made its money in the film business. Think about it, you took say 24 exposures and had to pay to develop all of them whether you wanted each one or not. What  a business. Digital changed all that. So EK bet on kiosks to print photos. But then cell phones became cameras and people stored images digitally. Gee these guys can't get a break. Now EK is trying to get into the printer business. But look at the lead HP and Epson have in that field. 

Catch up is a tough game.