Blue Chips in the Red: Kodak

Part 2-of-2:
The company has few trump cards left, that may be strategically played to buy them just enough time to stage a come back. Kodak has intellectual property that gives them the ability to earned licensing fees from, amounting to nearly 1.9 billion over the past three years. Although it brought in only $27 million in licensing fees in the first half of 2011, they anticipate yielding over $340 million in the first quarter of this year. Nevertheless, there has been a shift in their strategy, as Associated Press reported that the company is trying to sell its patents, which are said to be valued somewhere in the area of $2 - $3 billion. This may be to stave off bankruptcy, or perhaps to sustain the company through a bankruptcy protection.

In the past decade, Kodak had taken steps to shift its primary business to meet the demands of the technology revolution. Kodak had invested hundreds of million of capital in a new software for workflow, in addition to new home printing products, particularly photo printers and commercial inkjets. The company was all set to surpass their breakeven-point in 2005.

The CEO, Perez, had high hopes that 2013 would be a turning point for them with their new line of inkjets, their licensing and workflow software, but it is clearly faced with a myriad of business concerns weighing them down. The Wall Street Journal reported that three of Kodak's Board of Directors resigned in recent weeks, and Kodak is preparing to file for chapter 11 in the coming weeks. With the resignation of nor one, but three board members, it seems that there may be a disagreement about what strategy to use to steer the company back to being a top contender in its field.

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K. Reilly
The Cohn-Reilly Report

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Black Friday: Mixed Results Leaves Retailers Wondering

Black Friday attracted an impressive number of holiday shoppers, but the bargain hunters spent less than the average shopper last year.

According to the National Retail Federation (NRF), Black Friday sales came in only slightly above the last year’s Black Friday spending. That would have been encouraging if the shopping spree had continued though the weekend. Unfortunately, the turn-out dropped considerably as the weekend progressed Accordingly, the NFR projects a 1 percent decline in overall holiday sales for this year. Making matters worse, the Wall Street journal reported Videogame sales as being in a slump, and running out of steam before the holiday shopping got underway.

In recent years, Video Games have become the bright spot for retailers’ 4th quarter sales. The hottest games and consoles are used to lure shoppers into stores, which created the opportunity for retailers to entice shoppers to make larger purchases. Although retailers are still using video games as a way to attract consumers, video games and console sales fell nearly 19% in October. It should be noted that the last three months of the year account for over 50% of Video game sales, therefore, October is a good predictor for what can be expected the last quarter.

That being said, the realization that sales may not be what retailers had hoped, they looked to Cyber Monday for enhanced holiday sales. Accordingly, stores shifted their discount focus online. Promotions were in high gear for Cyber Monday in an effort to drive revenues up. Needless to say, competition for online shoppers has accelerated this week. The silver lining comes into view, with on-line results beginning to trriggle in. The numbers came in from Coremetrics (a Marketing Optimization Company) which shows a 35% increase in online shopping this weekend, over last year. This may be just the kind of up-tick retailers need to pull off a great 4th Quarter.

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K. Reilly
Cohn-Reilly Report / News Flash