Bob Dylan summed up the issue of adaptation versus extinction: "Well, you better keep swimmin', or you’ll sink like a stone/For the times, they are a-changin' ".
Chances are, after singing this line, Mr. Dyland went off to a photo shoot at which the photographer used Kodak film. This week, Rochester, New York-based Eastman Kodak (NYSE: EK) learned Bob’s truth head-on, and filed for bankruptcy, as the longtime photographic icon became yet another in the collection of slow-to-adapt companies that ultimately paid the price.
Yet, signs point to this not being the last we hear from Eastman Kodak; rather, that bankruptcy is another step toward the reinvention of the company, aping other corporations such as Chrysler and United Airlines.
Antonio Perez, who has been at the helm of Kodak since 2005, said the bankruptcy was a step "in our transformation in order to build the strong possible foundation for the Kodak of the future.
"What everyone should expect from Kodak is business as usual," Perez told employees and other observers in a video message.
Yet, critics say, business as usual may have been Kodak’s downfall. They question whether its turnaround strategy -- focusing on consumer and commercial printers -- can turn a profit.
Kodak’s predecessor, Eastman Dry Plate Co, was formed as a partnership in 1881 by George Eastman, and it became one of America's blue-chip giants, a company whose name became synonymous with taking pictures and its ubiquitous yellow film box.
But the company was slow to respond to competition in the film business from Fujifilm of Japan, which undercut Kodak's prices.
And though one of its own researchers invented the digital camera, Kodak was also slow to embrace digital photography.
At a court hearing Thursday, a lawyer representing Kodak creditors questioned management's plan to borrow $950 million U.S. to stay afloat during the bankruptcy process, noting the company had burned through $2 billion U.S. in the past two years trying to reinvent itself.
After the four-hour hearing, Kodak won approval for $650 million U.S. in interim bankruptcy financing, led by Citigroup.
Perez joined Kodak in 2003 and, as mentioned, was made CEO two years later, and on his watch, focused on printers, packaging and workforce software.
Kodak announced in July that it would try to sell some of its digital imaging patents, hoping to cash in on a frenzy for intellectual property that drove Google's $12.5-billion U.S. takeover of Motorola Mobility.
But Kodak failed to draw enough interest among potential buyers, driven in part by fears of the company's deteriorating financial health.
The recession didn’t help, either, with business growth slowing and the deterioration of the consumer film business already underway. How the company handles this latest challenge remains to be seen.
Eastman Kodak stock closed trading at 55.5 cents U.S. Thursday.
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