[Leica] Eastman Kodak article from Forbes

[Andrew Morang <morang@magnolia.net>]

Hello LUG readers,

Here are some excerpts from an article in Forbes, Sep. 7, 1998, about =
Eastman Kodak Co. titled "Vindication" (sorry, not directly about Leicas =
but related):

Eastman Kodak Co. Chief Executive George Fisher, 57, leans back in his =
chair, relaxed.  Kodak has just announced its second-quarter earnings, =
which far exceeded analysts expectations.  Wall Street responded by =
picking up the stock 17% in just three days, to over $86.  Earnings per =
share rose 43%, to $2.20.  Though the 1998 showing is impressive, it =
comes as a bounce-back from terrible 1997, when earnings went from $3.82 =
a share in 1996 to only one penny a share after charges for all of 1997.

Is it for real this time?  Few big companies have disappointed investors =
more in recent years than this Rochester, N.Y.-based $15 billion =
(revenues) photographic giant.

His biggest move was simplicity itself.  Almost afraid to compete in its =
basic business--photography--pre-Fisher Kodak had diversified all over =
the place--into pharmaceuticals, office equipment, batteries.  Fisher =
told employees that images, not aspirin, were their business, and that =
long-feared digital imaging was an ally-not an enemy.  He pointed to the =
huge potential of emerging markets like China and India... Out went such =
businesses as Sterling Drug, clinical diagnostics and household =
products, like Lysol.

The Kodak company Fisher took over was very much in the hold of the =
older U. S. blue chips: it was heavily integrated, preferring to make as =
many components of its products as possible.  Fisher is slowly changing =
the mold, mainly through joint ventures:  with Intel, to produce sensor =
chips for digital cameras;  another with AOL, to send processed photos =
to customers and digital form over the Internet.

Kodak has introduced digital cameras ranging in price from the below =
$1000 to $15,000, as well as a host consumer and professional films in =
the last year.  Fisher says Kodak has improved cycle time in some =
product areas tenfold in the past four years.

To improve coordination at top, Fisher created the chief operating =
officer.  Joining him is Daniel Carp, president and chief operating =
officer.  Carl Kohrt and Eric Steenberg serve as assistant chief =
operating officers.  Kohrt is responsible for the Asia-Pacific =
region-particularly China, where Kodak has scored big against its =
Japanese rival Fuji.

With almost 11,000 jobs still slated for elimination and, according to =
Steenburgh, plenty of costs still to cut, you can look to Kodak to =
continue to improve profit margins rather than build revenues for the =
immediate future...

Maybe Fisher wasn't the miracle man everyone expected him to be.  Though =
it took longer than people thought it would he's definitely turned the =
super tanker around.

Now some personal opinions:  I am dubious of the turnaround cited in the =
Forbes article.  I do not see much brilliant marketing from Kodak.  This =
summer, I observed that Fuji seems to be overtaking Kodak in Europe.  In =
the Vicksburg WalMart superstore, Fuji and Kodak have equal shelf space, =
so Kodak does not appear to lead here, either.  Many photographers I =
know are unimpressed with Kodak's marketing efforts and the way they =
have discontinued well-loved films.  I personally have seen only one =
Kodak digital camera in use ever.  The Kodak Photo CD was clever =
technically, but expensive and often (in my experience) poor quality =
depending on which contractor made the scans.  With high-quality =
slide/negative scanners available for less than $1000, I do not see much =
of a market for the CD's, where each image costs $2-$3.  On the positive =
side, many consumers like Kodak's film products, even if the marketing =
is inept.  Kodak's industrial films, especially their aerial photography =
products, are superb.  In conclusion, I still like many of Kodak's film =
products, but I would not hold any of its stock in my portfolio.

If some of you LUG readers have alternate viewpoints, I'd love to hear =
them.  Maybe we can make our fortunes from Kodak stock and buy more =
Leicas.

Andy Morang
Vicksburg, Mississippi USA