A company that once defined how the world captured memories now finds itself fighting to survive. After more than a century at the heart of the photography industry, Kodak has issued a stark warning that raises questions about its ability to continue operating. Read on to uncover what led to this dramatic turn and why Kodak’s future is suddenly far from guaranteed.
Kodak warns investors of survival risks
Eastman Kodak, the iconic photography company with a 133-year legacy, has issued a warning to investors that its future may be in jeopardy. In a regulatory filing dated August 11, Kodak revealed it has “substantial doubt” about its ability to continue as a going concern, signaling that the company may lack the financial resources necessary to meet its upcoming debt obligations. This type of warning is an official accounting red flag that suggests the business could potentially cease operations.
Kodak’s current financial difficulties are driven by nearly $500 million in short-term debt, coupled with pension liabilities exceeding $200 million. Addressing these concerns in a statement to CNN on Tuesday, a company spokesperson expressed confidence, stating Kodak is “confident it will be able to pay off a significant portion of its term loan well before it becomes due, and amend, extend or refinance our remaining debt and/or preferred stock obligations.” It’s important to note the spokesperson specified only a “significant portion” of the debt—not the entirety—would be paid off.
Last year, Kodak announced plans to terminate its pension plan as part of its broader strategy to reduce debt, according to the Wall Street Journal. Chief Financial Officer David Bullwinkle said, “a clear understanding [should be reached] by Aug. 15 of how we will satisfy our obligations to all plan participants,” referring to the pension plan.
Following these developments, Kodak’s stock took a sharp hit, dropping $1.73—or 26%—to $5.05 during Tuesday morning trading.
Kodak’s story of innovation and missed opportunities
The Eastman Kodak Company was officially incorporated in 1892, but its origins date back to 1879, when George Eastman secured his first patent for a plate-coating machine. In 1888, Eastman introduced the world’s first Kodak camera, selling it for $25.
At a time when photography was a complex craft requiring specialized skills and equipment, the Kodak camera revolutionized the industry by making photography accessible to the masses. Eastman famously coined the slogan: “You push the button, we do the rest.” His vision was to “make the camera as convenient as the pencil,” according to Kodak’s website.
For much of the 20th century, Kodak dominated the photography market. By the 1970s, it controlled 90% of the film market and 85% of camera sales in the United States.
However, this dominant position began to erode with the advent of new technology—ironically, technology Kodak helped pioneer. The company unveiled the first digital camera in 1975 but struggled to leverage this innovation effectively. Added to this were increasing challenges from competitors, especially Japanese firms like Fujifilm during the 1990s.
Kodak’s inability to fully embrace the digital shift culminated in its 2012 bankruptcy filing. At that time, it faced $6.75 billion in debt and had over 100,000 creditors. The company was forced to sell off many of its assets and patents and shut down the very camera manufacturing business that had made it famous. A year later, Kodak emerged from bankruptcy, aiming to reinvent itself as a smaller company focused on commercial and packaging printing.
In 2020, Kodak briefly found a new lease on life when the U.S. government enlisted it to produce pharmaceutical ingredients. This unexpected pivot caused its stock price to soar dramatically, triggering 20 trading circuit breakers in a single session.
What’s next for Kodak?
Despite facing recent financial setbacks, Kodak has expressed intentions to grow its business in certain key areas. The company still produces films and chemicals for industrial clients, including the film and entertainment industries, while also licensing its brand for a range of consumer products.
Kodak is also close to finishing the construction of a manufacturing facility designed to produce regulated pharmaceutical products. It already manufactures unregulated key starting materials for the pharmaceutical sector. Production at this newly retrofitted plant is slated to begin later this year.