For decades, Kodak was the 800-pound gorilla in the photography industry.  It made high-quality products that were easy to use and that most consumers could afford.   

There was always a “Kodak moment” that needed to be preserved in a photo: the baby’s first step, a family gathering, graduation, birthday party, or countless other occasions.  In a real sense, Kodak became a part of every occasion – recording all those special moments.

According to Wikipedia, Kodak’s annual revenues were a record high $16 billion in 1996, and profits peaked at $2.5 billion in 1999.  In 1996, the company had over two-thirds of the global market and the stock price topped $90.  People from Main Street to Wall Street loved the company and were certain that the good times would last forever.  

Unfortunately, they were wrong.  The company made several strategic mistakes that proved to be very costly.  The most important one was that it was too slow to incorporate emerging digital technology into its wares.  This was a major blunder because that technology was changing the industry – to the detriment of the company.  

As a result, both their revenues and profits began declining and so did their market share; along the way, shareholders suffered deep losses.  Kodak, which not long before had dominated the industry, found itself in a situation where a growing number of its products were becoming out of date, losing appeal to consumers. In 2012, Kodak filed for bankruptcy, a bitter pill for a company that for decades was the icon of the photography industry.    

Although this sounds like a very sad story, it really is not.  The company got back on track, learned a great deal from its mistakes and, under new management, made an impressive recovery.  As a result, it is now paying down debt and has even recorded gross profits.  That they were able to deal with all their challenges, get off the ropes, and become a vibrant player again is an amazing business comeback story.

 

Back From The Brink

2012 was the toughest year in Kodak’s history, but it also marked an important turning point.  When Kodak filed for bankruptcy, it had liabilities of $6.75 billion – a humongous figure that had to be dealt with.  And what made that even more difficult was that the company had to face this problem from a weakened financial position.  

The bankruptcy process, however, had a silver lining, because it wiped out $4.1 billion of its liabilities.  That not only eased the pain but, more importantly, it increased the likelihood that the company would survive.  There was, however, still more than $2.5 billion in debt that had to be repaid.    

“Initially, they tried to sell off their digital patent portfolio,” explains Logically Answered, a firm that produces a variety of educational materials.  “They hoped that would generate $2 billion.”  But, as poet Robert Browning noted, even the best plans of mice and men don’t always work out and, in this case, his observation also applied to a company.  While they did sell that asset, “The actual number Kodak got was just $527 million, a fraction of what they were hoping for.”    

Most of the debt was owed to the UK Kodak Pension Plan, and Kodak sold their imaging and documents units to them for $650 million – also much less than what they had counted on.  But Kodak Pension agreed to drop the balance of the debt.  On a related matter, Kodak was allowed to pay their other outstanding claims after exiting from bankruptcy.  Among that: $895 million financing with JP Morgan Chase and other creditors who received only a few cents on the dollar. 

On August 23, 2013, federal bankruptcy Judge Gropper, who had overseen the entire case, cancelled some of the debt despite the objections of creditors and approved a plan that allowed Kodak to emerge from bankruptcy.  

Commenting on the objections of creditors, Judge Gropper wrote, “This (ruling) comes on a day when many are losing retirement benefits, and many are finding that their recovery as a creditor is just a minute fraction of what their debt is…But I cannot decree a larger payment for creditors or any payment for shareholders if the value is not there.” Kodak’s lawyer had a somewhat more upbeat view, adding that “Kodak will be a very different company than the one in the popular imagination, and very different than the one that filed for bankruptcy.”

 

Change Is In The Air

The company made other important changes.  On March 12, 2014, Kodak appointed Jeffrey Clarke as their new CEO.  Clarke held senior positions at other companies and helped them navigate rough waters.  One of the reasons the company fell into hard times was that it didn’t keep up with changes in technology, and Clarke was determined to correct that.  

Another objective was to tap what he considered a very important resource: the company’s employees.  Clarke had great respect for them, as some had worked for the company for 20 years, 30 years, and in some cases for 40 or more.  And since he considered them experts, he listened carefully to their observations as well as to those of the customers to get a detailed understanding of what the company was doing right and what needed to be improved.  These days, they are heavily involved in inkjet printing, traditional printing, and film and chemicals for motion pictures and industrial use.   

Life hasn’t been easy for Kodak.  In the 2010s, it was struggling with debt and falling apart.  And in the early 2020s, it had to deal with other challenges: the pandemic and its ramifications, a huge spike in unemployment, and supply chain shortages among others.  According to Yahoo Finance, Kodak reported revenues of $261 million in the third quarter of 2024, slightly lower than the year earlier period.  Gross profit was 17%, also down a bit from 19% the year before.  Although these were not sterling results, Kodak held its own in difficult times. 

According to AI Overview, the main lesson to be learned from Kodak’s bankruptcy is that “Even the best companies have to adapt to change… and Kodak failed to adapt to the shift from film photography to digital.”  There were related problems too, “such as their failure to recognize market trends and customer needs.”

One wonders whether management ignored these red flags because it did not want to change.  After all, Kodak was a wonderful place to work, sold products consumers loved, and in its own way made the world a happier place.  In fact, the Kodak name still generates warm and fuzzy good feelings.  Who wanted change? Unfortunately, Wall Street had a different way of thinking, and Kodak and its shareholders learned this lesson the hard way.  Who says photography is just a snap?    

Sources: AI Overview; investor.kodak.com; wikipedia.org; yahoofinance.com; YouTube: Logically Answered: From Bankruptcy To Billions


Gerald Harris is a financial and feature writer. Gerald can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.