kodak brief review

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Note:

The examination will be in two parts. Part 1 will comprise a set of multiple-choice questions

designed to check your understanding of all of the lectures material. Part 2 will concern this case

study, with the examination paper including a set of questions about it.

The case study describes a situation, which you need to research further and resolve. In preparation

for the examination, you should analyse this case study and relate it to the lectures so that you arrive

at the examination with an understanding of how you might proceed.

CASE STUDY

Kodak, based in Rochester, New York, where it pioneered the use of photographic film 100

years ago, has been facing weak profits and job cuts as it struggles to turn round its

business.

Wednesday, 21 June, 2000, 11:26 GMT 12:26 UK

Kodak looks to digital salvation by BBC News Online's Steve Schifferes

The world's most famous film company is hoping that the digital film revolution will come to its rescue.

Dan Carp, Kodak's chief executive, told BBC News Online that he was "very frustrated" by the low share price for

his company which is trading at around 10 times earnings despite five quarters of record profits.

"There is no question that digital imaging is going to expand the use of photography and make it more user

friendly," he explained to News Online during a whirlwind tour of Europe.

"What's holding us back is some scepticism that the digital revolution is yet to be finalised," he said.

Fresh investment

Mr Carp told the BBC that the company would invest two-thirds of its $900m research and development budget in

digital technologies. It was also spending over $1bn in buying back its own shares in order to boost their price.

Analysts say the share buybacks are needed to boost the company's earnings per share which have been diluted

by employees cashing in some 20m stock options last year.

Mr Carp said he was not worried by the threat of a takeover. However, he admitted that the marketplace for digital

imaging technology was likely to be more crowded than traditional photography, with companies like Sony vying

with Kodak, Fuji, and Olympus.

Kodak had been slow to introduce full digital technology, fearing that it would hurt sales of existing photographic

products. But it now aims for 45% of its sales, and 27% of profits, to come from digital sales by 2005.

Mr Carp said that the introduction of broadband and other high-speed internet connections would speed the take-up

of digital technology. There were more than 4m digital cameras sold in the USA, and 1m in Europe, last year, and
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