Eastman Kodak Co., headquartered in Rochester, N.Y. Yet now, operated by a financially-embattled city still clawing its way from under the shadow of court oversight. Just over a year later, the company staggered into bankruptcy protection. Now, it’s been approved to start carrying out its plan and re-enter without federal oversight. Kodak’s unexpected lifeline does not address the long-term questions about the company’s viability.
The legendary photo giant is expected to begin manufacture on filmstocks at a retrofitted commercial space later this year. This initiative has the potential to be a watershed moment for its activities. Yet, Kodak’s history reveals a troubling trajectory. Initially brought down by competition from Japanese firms, Kodak struggled to adapt to the rapid shift from film to digital technology, which further hampered its business.
This prompted Kodak to say that as of June 30, it was in a good cash position with $155 million in cash. Of that, $70 million is stuck inside the U.S. In addition to this massive liquidity, the company has raised alarm bells regarding its ongoing viability. Last year, Kodak announced the termination of its retirement income plan to alleviate debt, alongside a series of business and patent sales aimed at restructuring its finances. The shuttering of the camera manufacturing unit that is the foundation upon which Kodak’s legacy was built leaves another gaping hole.
This week’s recent trading data further underscores the challenges Kodak faces, with Kodak’s shares sliding by more than 13% in early trading on Tuesday. In an earnings release today, the company that George Eastman founded in 1880 is continuing to warn investors about its death knells. Among other topics discussed, the company admitted to the concern that it may not be able to continue operating in its current form.
“Kodak has debt coming due within 12 months and does not have committed financing or available liquidity to meet such debt obligations if they were to become due in accordance with their current terms,” – Eastman Kodak Co.
Kodak’s leadership emphasizes that these financial conditions raise “substantial doubt” about the company’s ability to continue as a going concern.
“These conditions raise substantial doubt about Kodak’s ability to continue as a going concern,” – Eastman Kodak Co.
Even as Kodak readies itself to come out of court protection, the future is cloudy. The company’s ability to meet upcoming debt obligations and adapt to an evolving industry landscape will be critical in determining its survival. Kodak’s next chapter will be defined by its willingness and tenacity to meet these pain points. Real success will follow from getting back its former competitive edge.
