Antonio Perez, Kodak CEO, Explains the Company’s Business
If you’ve ever traveled to Rochester, NY, you know how depressing it can be up there, especially in the dead of winter. I thought about this hard bitten city when I read a story in the WSJ by Dana Mattioli about Kodak’s chief, Antonio Perez. The silver haired CEO talked about how the film manufacturer is doing these days. At one time they were the dominant employer of the city…now, well times are tough but looking better.
One somewhat puzzling aspect of Kodak’s business is that for the past few years, a huge part of their revenue stream came from lawsuits suing other manufacturers over intellectual property disputes. Patent fights with Samsung, then LG netted the company $550 and $400 million respectively. Now they’ve got another fight with Apple and RIM. Perez said they tried to strike licensing deals but all they ended up with is lawsuits.
Is this any way to run a business, counting lawsuits as your revenue stream? Perez maintains that though they are slowing down these legal fights, “because going to court is expensive and nobody benefits from it,” he still says that this source of funds are very valuable. Yeah when you make film for cameras, you need anything you can get.
What other ways can this maker of a product nobody uses any more make money? Well, there is still the movie-film business. This was going along pretty well until three big movie theater chains secured financing to convert 14,000 screens to digital. D’OH! Hate it when that happens! Perez explained in the story that there is nothing in the digital world that can compare with the staggering profits Kodak used to make from good old film. He referred to them as ‘very, very, very high gross margins.”
One thing the company does having going for it will be good for consumers. That is they make printers which use $10-15 ink cartridges. I know I’d love to be able to buy them for that much. But an analyst for Deutsche Bank said that printer profits come from ink, not from the machines (oh really!?) and that he doubted they can grab much more market share against the big boys like HP and others.