At least Eastman Kodak didn’t pin its latest turnaround effort on the fax 
machine. Just the same, as one securities analyst said, Wall Street worries 
that the once pre-eminent film company is jumping “from one buggy whip business 
to another.”
Antonio M. Perez, Kodak’s chief executive, has poured hundreds of millions of 
dollars into transforming Kodak into a giant in the inkjet printer business, 
even as printouts are increasingly being replaced with electronic copies on 
computers, tablets and smartphones.

“You will see that that business is going to be a gorgeous business for this 
company,” Mr. Perez told analysts in July. While it is difficult to know 
whether Mr. Perez’s strategy will succeed, two things are certain: Kodak is 
burning through a lot of cash to pursue it; and many investors are highly 

Consumer inkjet revenue at Kodak grew 48 percent in the second quarter, but 
since the first of the year, Kodak shares have lost about three-quarters of 
their value. And in recent weeks, rumors about the company going bankrupt have 
been rife. The stock fell 2.4 percent to close at $1.24 on Thursday.

Mr. Perez, who was named the chief executive in 2005, declined to comment for 
this article, citing the quiet period before the next earnings are announced on 
Nov. 3. Company officials deny that Kodak is considering a bankruptcy filing.

A Kodak spokesman said that Mr. Perez had pursued inkjet printers because the 
company had “a treasure trove” of inkjet technology in its research and 
development unit and that the business was “well positioned for ongoing 

“Our corporate strategy is focused on core strengths at the intersection of 
materials science and digital imaging science,” Christopher Veronda, the 
spokesman, said in an e-mail. “This is squarely in that arena.” In addition, 
Kodak officials said that inkjet printers were just part of a turnaround 
strategy that also included a focus on commercial printing, packaging and 
workplace software.

Critics of Kodak’s direction are impatient.

Gregg Abella, a co-principal at Investment Partners Asset Management, said he 
was tired of hearing Mr. Perez say the company would turn around in a year or 
two. And he questioned why the Kodak board had not been more assertive in 
steering Mr. Perez on a different course.

“How on earth did the board listen to this guy for the past six years and not 
do anything about it?” Mr. Abella said. “There is an expectation when you buy 
into the stock or bonds of a Fortune 500 company that the board will respond to 
deteriorating financial conditions before it becomes nothing more than a call 
option on its intellectual property.”

Chris Whitmore, the analyst who likened Kodak’s printer strategy to a buggy 
whip, said the company still had not recovered from its first misstep: its 
failure to fully embrace digital cameras after sales of Kodak’s signature 
yellow-box film collapsed.

“The big story here is that their core business — the yellow box business — got 
cannibalized by the digital camera, which ironically they invented,” said Mr. 
Whitmore, who works at Deutsche Bank Securities.

Mr. Perez is the latest Kodak chief executive to try to remake the company 
after its dominance in film was eroded by more nimble competitors and digital 
technology. A former Hewlett-Packard executive who lost the top job there to 
Carly Fiorina, Mr. Perez laid out a strategy that included closing film plants 
and refocusing the company. He leased out the company’s patent portfolio, which 
generated $1.9 billion from 2008 to 2010, to finance his turnaround efforts.

And Mr. Perez poured money into businesses that he thought would eventually pay 
dividends, including consumer inkjet printers, in effect taking on his former 
employer, H.P. Mr. Perez rejected the traditional razor-blade model used by 
most printer manufacturers who offered relatively cheap printers and made their 
money on the ink.

Instead, Kodak charged slightly higher prices for its printers and sold its ink 
relatively cheap. “We think it will give us an opportunity to disrupt the 
industry’s business model and address consumers’ main dissatisfaction: the cost 
of ink,” Mr. Perez told Businessweek in 2007.
To date, Kodak’s consumer inkjet business has captured about 6 percent of the 
United States market, according to the market research firm IDC. In contrast, 
H.P. commands about 60 percent of the market, which is expected to remain 
relatively flat or even decline.

“Technologically, I think the product is fine,” said Marco Boer, a vice 
president for I.T. Strategies, a digital printing market research firm. “But is 
it going to save Kodak? Even if inkjet was a phenomenal success, I am not sure 
if any company could grow that business fast enough to offset declines in 
Kodak’s other businesses.”

Ken Luskin, a disgruntled Kodak investor who runs Intrinsic Value Asset 
Management, said Mr. Perez’s turnaround strategy was the story of how “a 
company has been run into the ground by one guy’s ego needs.”

“He said, ‘I’m going to rub this in Hewlett-Packard’s face.’ This is why they 
are doing this,” Mr. Luskin said.

But Mark Kaufman, an analyst at Rafferty Capital, is more bullish on Kodak’s 
prospects. He said the company had better technology than its competitors in 
commercial and consumer printers. In addition, he said Kodak’s proposed sale of 
some of its patents could generate more than $2 billion and put the company in 
a position to be sold, or thrive on its own.

“They might be able to pull it off on their own because it’s superior 
technology,” he said.

Few would question that Mr. Perez has faced an unusually formidable task. The 
year that Mr. Perez was named chief executive, 2005, the company posted losses 
of nearly $1.3 billion.

Kodak was created by the inventor George Eastman in the late 19th century. It 
quickly became a household name by marketing film under the slogan, “You press 
the button, we do the rest.” Kodak thrived using the same razor-and-blade 
strategy, selling cameras for low prices and making its money on the film.

In 1975, a Kodak scientist invented the world’s first digital camera, which was 
about the size of a toaster. At that time, Kodak controlled about 90 percent of 
the film market and 85 percent of camera sales in the United States, according 
to Harvard researchers.

But Kodak’s phenomenal success in film would also be its undoing, making its 
managers complacent and slow to adapt to change. When Fuji began eating away at 
Kodak’s film business in the 1970s, Kodak executives ignored internal warnings 
because “they didn’t believe the American public would buy another film,” 
according to “Changing Focus: Kodak and the Battle to Save a Great American 
Company,” by Alecia Swasy.

In one notorious incident from the early 1990s, Kodak’s chief at the time, Kay 
R. Whitmore, fell asleep during a meeting with Microsoft’s founder, Bill Gates.

By then, it was clear that Kodak needed to make significant changes to stay 
relevant, with its film business in a steep decline. During the previous 
decade, the company acquired companies that made in-vitro blood analyzers, 
floppy disks, aspirin and Lysol in an attempt to reverse the decline, the 
Harvard study said.

“Let’s face realities,” said Ulysses Yannas, a broker at Buckman, Buckman & 
Reid who has followed Kodak for four decades and applauds Mr. Perez’s efforts. 
“This company was very, very badly managed throughout the ’60s, ’70s, ’80s and 
’90s. It was run like a civil service.”

Mr. Perez vowed to turn the company around by 2008. While that has yet to 
happen, Kodak officials say three-quarters of the company’s revenue now comes 
from digital products. A decade ago, most of its revenue still came from film. 
In addition, in the most recent quarter, Kodak’s main growth areas grew 22 
percent, led by the 48 percent increase in consumer inkjet revenue.

“We remain focused on our strategy to become a profitable, sustainable digital 
company,” Mr. Veronda, the spokesman, said in an e-mail.
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