Kodak Goes Bankrupt: What Big Retailer Is Next?
As reported by Reuters (and many other agencies) on January 19, 2012, Kodak Co has filed for bankruptcy protection. Yes … Kodak – the company that invented the hand-held camera. If even such icons are not safe in today’s economy then who is?
Looking back at Kodak’s history we have to admit that the company hasn’t been particularly efficient at embracing modern technologies. Even though they were the ones to invent the simple hand-held camera they didn’t shift to the digital camera age soon enough, which created a lot of problems in the company’s recent history.
Just nine years ago the company employed over 63,000 people worldwide. Today it’s 17,000. What will happen next? Let’s just say that the company promises to shrink significantly even more (i.e. more laid-offs). From global leader to bankruptcy is not the American dream at all.
Although we are not here to prey on Kodak’s bad shape, let’s just quickly have a look at how bad it actually is and then move on to what the whole situation means to affiliates.
First of all, Kodak is not out. The company is still operating thanks to Citigroup’s money; a $950 million injection, to be exact.
However, the fact remains that Kodak has actually not seen any annual profit since 2007. More than four years of living under the line is something even a major brand like Kodak can’t handle. Actually, according to papers filed, Kodak had only about $5.1 billion of assets and $6.75 billion of liabilities at the end of September 2011. Not to mention the fact that if you want to buy Kodak shares right now they’ll only cost you 30 cents each (comparing to the $94 value they had 15 years ago).
First of all, we can’t know for sure which (or if any) major brands will fall next. Big worldwide brands don’t share their financial problems very openly, and it’s quite understandable. Even if someone is experiencing some serious obstacles they won’t share it with the public because then those problems are bound to become even bigger (stocks going down and such).
The fact is that anyone can go bankrupt at any given moment, no matter what industry the company’s in. A lot of different factors can take part in this. Therefore, making any kind of accurate predictions is, well, impossible.
That being said, there still are, however, some leads we can notice and treat as a lesson. These are things that were the problem makers for Kodak and can create as much bad karma for other companies as well.
One of Kodak’s problems was that they failed to embrace new technologies when the time came. We’re talking about the digital camera era. It was the time when the world was shifting from standard film cameras to their younger (digital) brothers and sisters. Kodak missed that period.
Unfortunately, there are companies somewhat following Kodak’s steps right now. It’s not the place for throwing names, but we have to agree that everyone who fails to adapt to modern technologies and changes in customer behavior is bound to fail.
Among industries that, for some reason, are still trying to go upstream instead of just adapting we have to name the worlds of film, art, literature, news and music. And we don’t have to look hard to find examples. You can simply do a Google search on companies supporting the whole SOPA bill. Why do they try to protect themselves by censoring the internet? –Because they don’t know how to adapt and make going with the stream work for them.
To put in plain English: everyone who isn’t dealing with modern technologies (including the internet) very well is sure to face some major problems on their way. The main question, then, is this:
What affiliates can do not to choose a bound-to-bankrupt company?
If you’re an affiliate and you’re searching for a recognizable brand to promote their products then it’s good to start your possible-bankruptcy research in the most obvious places.
For example, if a company is not turning annual profit for a couple of years then it’s an obvious indication that something bad is going on. Stock price going down is another one. Big laid-offs are also not a good thing for a company. Not surprisingly, these are all things we’ve seen with Kodak.
And of course, there’s the big indicator (the thing we discussed earlier) – companies that can’t find themselves in the world of today (including their marketing, products and services).
What about the leaders of today?
Let’s look at two of the most recognizable brands – Amazon and Apple, and try to predict what can happen for them in the near future.
Amazon is the biggest store on the internet. It’s started as a book store, but now it offers almost every item imaginable. To put it in a sentence: Amazon is taking over the internet. We personally predict that in the next 10 years or so Amazon will become the only online store out there – the Google of online stores.
Amazon stands strong in the online world and there’s not one indication of it going down anytime soon. Even though there have been some problems on the Amazon-affiliate connection (the California ban, for example), Amazon is still a pretty safe place for affiliates around the world. That is of course, until the government strikes back with yet another bill.
Apple has an interesting streak of products as of late. It seems like each product they release turns out an even bigger success than the previous one. But the company is interesting for one more reason, a completely different one – they are not really innovative about their products, but they can turn them into massive success regardless. Was iPod innovative? –Of course not; it’s just an MP3 player. Was iPad innovative? –Same story.
Most of Apple’s power lies somewhere in their marketing and promotion skills. The ability to take a product and tell the world that it’s the best thing ever. All this makes it highly unlikely for Apple to go bankrupt in the near future. Until a new competitor comes Apple is probably safe. Such a competitor would have to be able to accomplish even bigger things, and be portrayed as even cooler than Apple.
There are other big brands that can be brought into this discussion. Just to name a few: Coca-Cola, Microsoft, IBM, Wallmart, Zappos, eBay, and others. What do you think, can any of these brands be facing bankruptcy anytime soon?