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Concomitantly, the traditional core of the business is declining faster than the growth of the digital business, resulting in an overall decline of sales. This results the risk that an increasing amount of investors may begin to lose faith in the company's long-term sustainability. Although Perez has indicated a time line for the implementation of new developments, Guerrera indicates that, in the light of current trends, this may be too long for investors to retain their faith and investments in Kodak. Yee indicates the same thing on the basis of drops in shares during 2003, when Kodak announced a 72 per cent dividend cut and its intention to phase out film by means of its acquisition of digital companies. Investors were very skeptical of this move at such a late stage in the digital world, and doubted Kodak's ability to mitigate its tardiness in entering the market. According to Yee, however, this doubt has been proven at least partially wrong, as Kodak has been able to grow to a sufficient degree to provide sound competition to companies such as Sony and Canon in the top spot of the U.S. market share in digital cameras.
Further risks relate to Kodak's newest acquisitions. In addition to being responsible for the large amount of debt accumulated, these acquisitions carry risks of their own. History appears to indicate that Kodak has integrated other companies with limited success....
Perez however has a large amount of confidence in his abilities to reform Kodak according to a business model for the digital age.
Whether his strategies will succeed, only time can tell. Time appears to be the main determining factor in Kodak's survival or decline. As long as investor confidence can be maintained, it is possible that the company will make a great success of its overhaul efforts. I believe that it is possible to maintain a sustainable growth pattern for the company. I am however not sure that all of the risks the company is taking are sound. Historically unsound decisions should for example be kept to a minimum rather than retried on the assumption that it will work. Mr. Perez does however seem to be very aware of the particular risks and benefits of every particular investment. The crucial deciding factor will probably be how long investors will be willing to wait for any apparent growth in the company.
Sources
Guerrera, Francesco. "Business Life: Kodak refocuses on digital age." Financial Times, Nov. 29, 2006.
Yee, Amy. "Comment & Analysis: Banishing the negative: how Kodak is developing its blueprint for a digital transformation." New York: Financial Times, January 26, 2006.
Sources
Guerrera, Francesco. "Business Life: Kodak refocuses on digital age." Financial Times, Nov. 29, 2006.
Yee, Amy. "Comment & Analysis: Banishing the negative: how Kodak is developing its blueprint for a digital transformation." New York: Financial Times, January 26, 2006.
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