Can Kodak Come Back?

Getting kicked out of the Dow Jones Industrial Average hurts. Just ask EastmanKodak (NYSE: EK  ) or its fading roommates AT&T (NYSE: T  ) and International Paper (NYSE: IP  ) . It's humbling to be told by an archaic benchmark that you're passe. But it's not as if Kodak has time to lick its wounds. It's a cruel, cruel world out there, and for Kodak it's not a pretty picture.

Digital photography changed everything. When my oldest son used to ask to borrow my camera, I always tried to limit him to a snap or two. Film costs money. Development costs money. My time spent chasing him around to retrieve the camera? Money. But now I can hand over the digital camera, tell him to go crazy, and know that any duds can be easily deleted, while a spacious hard drive or dirt-cheap CD preserves the gems forever.

Kodak has tried. This is no stubborn buggy-whip maker spitting defiantly into the winds of change. Kodak embraced the digital revolution. You'll find the company's name on digital cameras and memory products. Its Ofoto site is a worthy platform to upload digital snapshots and purchase prints online. The company has so many patents it even went out and suedSony (NYSE: SNE  ) .

Still, shareholders deserve better. If a picture is worth a thousand words, Kodak is pressed to fill in the 998 spaces after "I'm sorry." After slashing its dividend and making some painful job cuts, the company's problem isn't trying to fit in. It's trying to discover if digital photography can be adequately monetized.

Storage is a commodity. Digital cameras stand a better chance in terms of pricing, but it's not as if the company's EasyShare products can command much of a premium against seasoned rivals like Canon (NYSE: CAJ  ) or cheaper upstarts that pack plenty of specs for the buck.

Kodak will be able to survive, but it might have to do the unfathomable to thrive in a film-less future -- become an entertainment company. It will need to make its online presence more vibrant, dynamic, and sticky. It will need to market with panache. It will need to pose pretty for its next portrait with an airbrush at the ready.

After nearly a century in the development business, it's time for Kodak to develop some business.

Do you still use film or are you exclusively one with the digital movement? Who makes the best digital cameras? Are all memory and storage devices the same? What do I do with this picture of a UFO that I snapped yesterday? All this and more -- in the Photography discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz has never tried to shake it like a Polaroid picture. He does not own shares in any of the companies mentioned in this story.


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