Eastman Kodak's CEO Antonio Perez announced 4th quarter earnings yesterday, and it was more of the same: sales down, earnings down, headcount down. Mr. Perez said that in 2011 they will abandon "segments that are not profitable". What I suspect he means is that two iconic businesses will be dismissed from Kodak's lineup: cameras and film.

A hundred years ago the Brownie box camera became a sensation due to reasonable prices and ease of use. The "You Push The Button, We Do The Rest" slogan helped turn Kodak into a household word around the world. Millions of families used the Brownie and its descendants to record their memories. But today's snapshot camera isn't even a camera - it's a phone. Nearly everyone carries a mobile phone, many of them take decent photos and each generation seems to be better. It comes down to this: you don't need or want to carry two devices. In that battle, a camera will lose to a phone/camera. Kodak has been making next to nothing on that business, and while you will still likely see the yellow & red logo on small cameras, it will be a licensing deal. Kodak will get a few dollars, nothing more.

But for a hundred years film has produced the real profits at Kodak. Selling film was like selling razor blades: use it up and you need more. Digital is like having a razor blade that never gets dull. Motion picture film has kept the operation humming lately, but even that is starting to slow (blame it on "Avatar"). Yesterday's earnings report shows that the film unit lost money in the 4th quarter. That's significant because Kodak has been milking the profits from the film cow to feed their other businesses. But if that cow is not giving any more milk, watch for management to send it off for hamburger. That's what Mr. Perez really means.

GTC

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