Price Deflation, Asset Prices, And Threats To Growth (3)

Historical Stock PricesStandard & Poor’s introduced its first stock market index in 1923 and created the S&P 500 Index in 1957. November 10, 2011: Legg Mason calls it quits, announcing it dumped the last of its Kodak holdings, 7.9 million shares last month. They started accumulating shares in 2000 when the stock was at 60. It closed today at 1.14. Ouch! January 6, 2012: In the continuing bizarre saga of one John Michael Paul, who allegedly issued a death threat against Perez (see December 23, 2011 above) appeared in court today, apparently to set a date for him to appear in court.

Ironically, he sold his stock at 58 cents and it closed today at 37 cents, so you could argue that he did better than a lot of other folks still left holding this particular bag. Presumably, he needs the big bux to maintain his secret unlisted million dollar 8200 sq. ft. palazzo in a undisclosed Rochester ‘burb (where a million goes a long way). The Night Owl is still here, still writing about the stock market every night in The Night Owl Trader and still contemplating writing a book about the sad demise of Eastman Kodak.

It is also true that in 1997, when Kodak hit its all-time high stock price, there were about 22,000 unemployed people in Rochester. But Wall Street also deserves a bit of the blame by pessimistically driving away capital during periods when Kodak could have succeeded in new ventures based on its core competencies and demanding the profit margins the stock had enjoyed from the high margin film business. This story illustrates very well a big part of Kodak’s problems – it got so big the right hand didn’t know what the left hand was doing. If you extend the current trend line of EK forward from today’s 65 cent close, it intersects zero around the end of next month.

Also when the disk camera was introduced, local independent photofinishers were gabbing increased market share from EK. Big reason, lower print price. In my opinion one of Kodak’s biggest mistakes was the eventual elimination of what could have been a big play in healthcare (drugs, x-rays (both film and digital), Ektachem (large potential for diagnostics on a chip here), and who knows what the future could have been in that). Even if Kodak had entered this market early, they would have had a year at the most before a dozen competitors joined them with good products at better prices.Historical Stock Prices

Interesting that Eastman Park Micrographics jacked up all the service contract prices and the owners of the legacy analog Kodak products paid it. Eastman Park Micrographics is making a profit. Now there are literally thousands of people out of jobs, even more that trusted you and lost pension & retirement money on your stock and you still did next to no damage to HP. You should be proud….terrific legacy you have left. If not then Muddy Waters is right: the stock is going to zero as there are few forests and much debt.

Historical Stock Prices