Kodak - Repercussions of a "Bipolar Disorder"

Following the recent Kodak Investor Meeting, some confusion emerged regarding the future prospects of their electrophotographic product group (Nexpress and Digimaster). Much of the session's  discussion revolved around what CEO Antonio Perez called "buckets" of activity, and depending on which bucket a product group was associated with you could sometimes infer what the fate of that product group would be. But sometimes not . . .

A small number of product groups (three, to be exact) will receive the highest level of management attention and resources to develop future business as members of the core investment bucket. The selected product groups are a somewhat eclectic mix: Enterprise Solutions (workflow applications), inkjet production systems (Stream technology) and consumer inkjet products.

Another bucket was cash generation, implying established and profitable product groups to be exploited, essentially cash cows to be milked with moderately low maintenance.

The electrophotographic group was not selected for either of these groups, each of which has more obvious implications for the respective business areas. Instead, the Nexpress and Digimaster products were placed in a dubious third bucket called transformation.  This bucket contains a number of activity sub-buckets ranging from disposing of the business immediately to investigating the best way to generate short-term cash (sounds pretty similar) to repositioning the product group. 

What repositioning means depends on what product group is under consideration as well as presumably who you ask and how various alternative strategies are playing out. This may include joint ventures, partnerships, licensing or niche strategies.  Of course, if these partnership or other goals are not achieved, one would hardly have an alternative other than to consider disposing of the other product groups as well.  

But Kodak management did not want to make that explicit statement for the electrophotographic products, instead emphasizing their business value and the anticipation that these product areas will be supported and expanded in the future. Noble, except for the fact that if they really stand by a product line, then (by their own definition) they would place it the core investment bucket. Which did not happen for Nexpress and Digimaster.