10 Turnarounds That Haven't Turned Around: Eastman Kodak (EK)

Eastman Kodak (NYSE:EK) is about as unexciting as it gets, and its long-term turnaround plan has been met with the same excitement.  How many times can one company stay on a long and slow restructuring path?  The digital age started being a problem for Kodak in the late 1990’s and its stock actually managed to hang on through the early 2000’s.  But now this has been a dead fish and it hasn’t transformed enough away from print photography. 

It has tried doing more digital offerings but hasn’t been aggressive enough in making strategic acquisitions that could drastically throw it into more of a digital company.  The company had the pole position in a duopoly with Fuji and managed to not win in the digital age to the extent that it could have. 

In late 2006 we named Antonio Perez as one of the top CEO’s who needed to go, but he’s still there.  He’s a nice guy but hasn’t been effective and shareholders should keep the pressure on him.  It needs someone who can come in and be aggressive as hell.  If not, send send Perez at least to the CEO toughening-up rehab camp.  The company has been far too slow to make the inevitable cuts that it will ultimately need.

This company needs to help its balance sheet as well and what it has tried and done there on its own just hasn’t worked.  Shareholders haven’t seemed as impatient as we would have guessed and we really wonder how the company can justify everything today.  At $22.00-ish, it is at the bottom of a $20 to $30 long-term trading range. 

It will take a miracle to turn this one around in a mere year, particularly as the analysts are looking for a slight drop again in 2008.

Early this week we are running a list of stocks that have been in a turnaround plan, yet the stocks and the businesses haven’t turned around.  Could these be the stocks to watch for 2008?  Sign up for our own open email distribution list covering buyouts, spin-offs, unusual options activity, special situation previews, merger-arb spreads, and more.

Jon C. Ogg
December 17, 2007

Jon Ogg can be reached at [email protected]; he produces the SPECIAL SITUATION newsletter and he does not own securities in the companies he covers.