Eastman Kodak & Permanent Shrinkage (EK)

Eastman Kodak Company (NYSE: EK) keeps shrinking operations.  It doesn’t matter what the GDP numbers and unemployment numbers are.  It isn’t even a recession at Eastman Kodak. It is a depression.  The company keeps shrinking itself.  Unfortunately, it is not anticipated that this will change.

The company said on March 20 it committed to shut its printing plate manufacturing operation in Windsor, Colorado by the end of 2009.  Most of production handled by the site will be transferred to the plant in Columbus, Georgia.

Eastman Kodak will incur restructuring charges:

• approximately $30 million as a result of inventory write-offs;
• accelerated depreciation of approximately $19 million;
• employee termination benefits of approximately $6 million;
• other exit costs of approximately $5 million;
• approximately $2 million of operational charges.

And today the troubled photo company announced its plan to shut its converting and packaging facility for motion picture films at the Windsor, Colorado site by the end of 2009, which will be then moved to Rochester, New York.

The company said these actions are a part of the 2009 restructuring program announced at the end of January.  It seems that the crowd of analysts is getting smaller and smaller.  The good news is that the losses for Fiscal-2010 are supposed to be smaller than this year.  The bad news is that the revenues are expected to shrink as well.

We called for Antonio Perez to be on the 2009 CEO’s To Go list.  There is a reason.  Everything has been too much of the same.  How many years can a company be in restructuring mode?  There is only one sort of manager that can run this company now with the recession taking a bite out of the digital side of Kodak.  It needs someone who knows how to manage earnings at a large company in a sector that is in a race to extinction.  This may sound crass, but that may be an old-line tobacco CEO.

Jon C. Ogg
March 24, 2009