Eastman Kodak Settled With Sony; CEO Perez Might Get Saved

Stock Tickers: EK, SNE, HD, WMT

There was a news release today noting that Eastman Kodak (EK) and Sony (SNE) settled digital patent cases and are going to share access to digital camera patents.  Maybe this will save the CEO Antonio Perez IF and only IF he can continue getting these digital photo issues behind the company and takes some bold steps. 

I awarded him one of the 10 CEO’s that need to go at the end of 2006.  Don’t take this the wrong way, he certainly hasn’t done what Nardelli did to Home Depot (HD) nor what Lee Scott continued at Wal-Mart (WMT).  He may be the nicest guy in the world.  This settlement doesn’t change the position or call, not close and not yet anyway.  This is equivalent to rewarding a 4th grade student for not skipping school.  If the kid stays in school and starts making good marks then they are deserving of reward.  Until several steps are taken, Perez is still on probation.

What needs to happen now is a more full-court press from Eastman Kodak.  If he is nice guy he needs to go take an ANGER INSTALLMENT class for his News Years Resolution.  The company blew the entire digital film opportunity as far as Wall Street is concerned.  They have been in a constant widdling away of their business and employees for what has felt like a career. Now they need to go roll-up these little puny niche online photo operations, or they need to try to put them out of business.  They’ll have to spend close to $1 Billion to knock a bunch of smaller players out, but if they choose the buying binge then it’s a Billion soon or several billion perpetually.  If they do not do this then they need to put more of a full court press on the other digital film companies with a lot more advertising and they need to find a way to attack the security and credibility of other services.

Before they go buy these smaller lines they need to go get more digital new world media pros and they need to wrap that steady restructuring program up rapidly.  They need to almost overcut on that layoff plan too and just get this all over with.  If Eastman Kodak has to go out and hire again the street would probably look at it with a positive.  There is really no reason for this company to continue operating at losses, and the forward valuations for Fiscal DEC 2007 are not showing any "Value" for value investors yet.  The balance sheet is not in a dire situation, but they could shore this up to if you use my strict balance sheet break-ups.

When I made the alert on DEC 14 about Perez needing to go the EK shares were at $26.32, and EK shares closed today at $25.91.  The shares have a 52-week range of $2618.93 to $30.91.  This is just the beginning of a blueprint for Mr. Perez to not go into the books as "yet another Eastman Kodak CEO who let the digital divide get away."

Jon C. Ogg
January 3, 2007