November 25, 2024

DealBook: Kodak’s Fuzzy Future

Eastman Kodak's headquarters in Rochester.David Duprey/Associated PressEastman Kodak’s headquarters in Rochester.

When Eastman Kodak emerges from bankruptcy this summer or fall, it will be a shadow of the blue-chip corporate giant it once was.

A celebrated company whose little yellow packages of film documented generations of birthday parties, weddings and anniversaries, the new Kodak will be more commercially focused, providing printing and imaging services to businesses as well as film to the movie industry.

Consumers will probably still be able to find Kodak-brand film in vacation spots around the world. They will still be able to buy digital cameras bearing the Kodak name. And they will still be able to download and print their digital pictures at kiosks in their local drugstores.

But those businesses will no longer be owned or controlled by Kodak. As part of the more than yearlong bankruptcy process, they were sold to others.

Antonio M. Perez, Kodak’s oft-criticized chief executive, who has been trying to stage a turnaround of the company since 2005 and has overseen it through bankruptcy proceedings, said in a news release this week that the company had a “clear path forward” and was positioned for a “profitable and sustainable future.”

Kodak's chief, Antonio Perez.Yuri Gripas/ReutersKodak’s chief, Antonio Perez.

But some skeptics sounded warnings about Kodak’s outlook, noting that certain commercial businesses that the company is banking on are fiercely competitive and that Kodak’s own projections show steep declines in growth in other business lines.

The steady decline and evolution of Kodak’s business has been felt most strongly in Rochester, where the predecessor for the company was founded by George Eastman in 1881.

A classic, all-American company town whose landscape is dotted with the legacy of Mr. Eastman and Kodak, Rochester and some of its residents admit that the days of Kodak as a corporate giant were well behind it.

“I cannot remember a case that I’ve ever been associated with in any way where so many people wanted the company to succeed but so few people thought it actually could,” said John C. Ninfo II, a retired United States bankruptcy judge whose grandfather worked at Kodak and whose great uncle tended the gardens at the Eastman house. “For some, the bankruptcy proceeding has been a sorrowful thing, like losing a family member.”

But critics of the company also said its unwillingness — seemingly even in the throes of bankruptcy — to acknowledge that many of its products had fallen out of favor and become almost quaint in an increasingly digitized world was its ultimate downfall.

“The company made a big mistake of riding the cash cow — film — to the point that there was simply no more milk coming from it,” said George T. Conboy, the chairman of Brighton Securities, a stock brokerage and financial services firm in Rochester.

In the bankruptcy process over the last year, many of Kodak’s most recognizable businesses were either transferred or sold.

Early last year, it announced plans to stop making digital cameras, pocket video cameras and digital picture frames. Kodak recently entered an agreement to license its name for digital cameras to another company. It sold part of its online photo publishing service to the Internet publishing firm Shutterfly for $23.8 million.

But the bankruptcy process hit a major snag last year when the company struggled to sell what it considered to be a crown jewel — a package of 1,100 digital imaging patents.

Kodak had hoped the patents could go for as much as $2.6 billion. But a consortium of buyers that included some of the world’s largest technology companies, like Apple, Google and Facebook, bought the patents in December for far less, about $527 million. The firms have not said how they plan to incorporate or use the Kodak technology, and many of the patents are for processes and methods that consumers often cannot see. That money was used to repay a big chunk of a loan that Kodak had obtained shortly after filing for bankruptcy in early 2012.

“What that situation signified — which was part of the problem with the whole business model — is that they thought their technology and their patents were more valuable than they really were,” said Jay T. Westbrook, a professor at the University of Texas Law School. “They clung to that right until the end.”

Another big hurdle in the bankruptcy proceedings was cleared this week when Kodak said it would spin off two businesses to the Kodak Pension Plan in Britain for $650 million in cash and debt as part of a deal that would absolve Kodak of $2.8 billion of claims the pension had made against the company. The agreement still needs the approval of the bankruptcy court.

Kodak's pension plan in Britain recently bought the rights to two operating units, including the one that produces Kodak-brand film.Scott Olson/Getty ImagesKodak’s pension plan in Britain recently bought the rights to two operating units, including the one that produces Kodak-brand film.

The two segments that were sold include document imaging and the business that made Kodak a household name, its camera film and photographic paper lines, along with the kiosks found in Target and Walgreens stores where consumers can download and print pictures.

Officials with the British pension fund, which retained the right to use the Kodak brand, have indicated that they intend to hire a management team to run the business. A spokesman for Steven Ross, chairman of the fund, could not reach Mr. Ross for a requested interview.

The film business is in a decline, but observers said the deal was probably the best alternative for the pension fund.

“They can either run the business and throw off cash every year to pay the pensioners,” Professor Westbrook said. “Or they can keep the business for a year or two or five years and maybe something will happen that will make it look better and sell it then.”

As for Kodak’s new focus on the commercial side of the business, analysts worry that future growth and profits could prove difficult there as well.

For instance, in a presentation Kodak provided this year to its creditors in the bankruptcy court, Kodak showed a sharp 34 percent decline in growth through 2017 in the segment that includes the entertainment imaging and commercial films business.

Another business Kodak is banking on for its future is its commercial printing and packaging business, which creates packaging labels for companies, like the plastic labels found on a bottle of juice. Analysts describe that as a highly fragmented and competitive industry and say that Kodak’s share of the market is fairly small.

In an e-mailed response to questions, a Kodak spokesman said that the company “has a compelling and unique combination of advantages to lead this industry.”

But some observers see an uphill battle.

“This is a company that is going from being a behemoth that owned the market to a niche player scrapping for share,” Mr. Conboy said. “It will be a different game for the new Eastman Kodak.”

Article source: http://dealbook.nytimes.com/2013/05/03/after-bankruptcy-a-leaner-kodak-faces-an-uphill-battle/?partner=rss&emc=rss

DealBook: Citigroup’s Earnings Rose 30% in 1st Quarter

A Citibank branch in New York.Keith Bedford/ReutersA Citibank branch in New York.

9:50 a.m. | Updated

Citigroup on Monday reported first-quarter profit of $3.8 billion, or $1.23 a share, exceeding analysts’ estimates, as the bank continued to reduce costs and unload troubled assets.

The bank also reported higher revenue of $20.5 billion, buoyed by continued gains in its investment banking business.

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In the lead up to the release of bank’s quarterly earnings, analysts had estimated the bank would post earnings of $1.18 a share on revenue of $20.17 billion, according to a survey by Thomson Reuters. Adjusted for certain charges, the company reported a profit of $4 billion on revenue of $20.8 billion in the first quarter. Citigroup’s stock rose more than 2 percent, to $45.87, in early morning trading.

“Achieving consistent, high-quality earnings is one of my top priorities and these results are encouraging,” Michael L. Corbat, the bank’s chief executive, said in a statement. “During the quarter, we benefited from seasonally strong results in our markets businesses, sustained momentum in investment banking, continued year-over-year growth in loans and deposits in Citicorp, and a more favorable credit environment.”

The results come after a particularly disappointing fourth quarter for Citigroup, when profits were hampered by mortgage woes stemming from the financial crisis. Last quarter, for example, Citigroup had $1.3 billion in legal costs and related expenses.

Citigroup has been aggressively whittling down a morass of soured loans and cutting less-profitable business lines in an effort to reduce costs. In December, it said it would eliminate 11,000 jobs worldwide. Within its Citi Holdings unit, Citigroup continues to unwind a glut of soured assets. The assets in that unit were down by $60 billion in the first quarter.

Like its rivals JPMorgan Chase and Wells Fargo, Citigroup said revenue growth slackened in the first quarter. Citigroup faces increasing pressure to cut costs and bolster shareholder returns.

Mr. Corbat addressed the continued difficulty in the banking industry as the economy limped toward a recovery, saying in a statement that “the environment remains challenging and we are sure to be tested as we go through the year.”

The earnings on Monday pointed to a broad skittishness among consumers to take on fresh debt.

“I don’t think we have a real confident consumer driving the economy,” John C. Gerspach, the bank’s chief financial officer, said on a call on Monday. “I still think we are seeing a certain amount of deleveraging.”

Citigroup has been trying to capitalize on its vast international footprint and to focus on developing countries that offer more opportunities for growth than the United States. In North America, revenue fell to $5.1 billion from $5.2 billion in the period a year earlier. The decline stems in part from a persistent caution among Americans to take on additional loans.

Despite sluggishness in North America, Citigroup reported revenue growth of 4 percent in Latin America. Net income within Latin America rose 5 percent, to $412 million, in the first quarter, while net income in the global consumer banking group fell 11 percent, to $1.95 billion.

Citigroup is also grappling with a continually shifting regulatory landscape in Asia. In South Korea, for example, national officials placed a cap on the interest rates of a range of consumer loans. Mr. Gerspach noted that there were “still headwinds” in the region.

Beneath the headline numbers, Citigroup experienced gains in some of its businesses, and deposits grew 3 percent, to $934 billion. Total loans also rose 5 percent, to $539 billion.

Still, Citigroup, like other banks, struck an optimistic tone about consumers’ ability to pay their bills on time. Delinquencies have fallen, Mr. Gerspach said. “All the improvements we have been seeing not only carried over into the first quarter, but improved,” he said.

Another bright spot in the first quarter was the securities and banking group, which was bolstered by strong gains in investment banking, fixed income and equities. Revenue surged 31 percent, to $6.98 billion, while net income was $2.3 billion, up 81 percent from the period a year earlier. For Citigroup, the unit has been a consistent focus. Mr. Gerspach reiterated that on Monday, saying the bank continued to make “steady progress” in its share of a “client’s wallet.”

Much of the gains in securities and banking came from Citigroup’s investment banking unit, which was buoyed by increases in debt and equity underwriting. The unit’s revenue increased to $1.1 billion, up 22 percent from the period a year earlier.

The quarterly report is the second under the leadership of Mr. Corbat, who took over after the abrupt ouster of Vikram S. Pandit. In October, Michael E. O’Neill, the bank’s forceful chairman, pushed Mr. Pandit out in favor of Mr. Corbat.

Since taking over, Mr. Corbat has vowed to continue reorienting the bank toward its core business while shedding less-profitable units. Mr. Corbat has said he is willing to eliminate operations across the globe.

Citigroup continues to be haunted by its mortgage woes. Last month, it agreed to pay $730 million settle claims that it duped investors into buying securities backed by shaky mortgage loans. The bank did not admit any wrongdoing. Cautioning investors on Monday, Mr. Gerspach said that legal expenses remained “volatile.”


This post has been revised to reflect the following correction:

Correction: April 15, 2013

An earlier version of this article misstated Citigroup’s revenue performance in North America. Revenue fell to $5.1 billion from the period a year earlier, it didn’t increase.

Article source: http://dealbook.nytimes.com/2013/04/15/citigroups-earnings-rose-30-in-first-quarter/?partner=rss&emc=rss

DealBook: UBS Posts $2 Billion Loss Tied to Legal Settlements

The Swiss bank UBS in Zurich.Michael Buholzer/ReutersThe Swiss bank UBS in Zurich.

LONDON – The Swiss bank UBS on Tuesday reported a large loss for the fourth quarter, driven by costs to settle legal matters, including its role in a global rate-manipulation scandal.

UBS booked a loss of 1.9 billion Swiss francs ($2 billion), a sharp drop compared with a profit of 323 million francs in the period a year earlier. The loss was slightly smaller than some analysts had predicted, and UBS said it planned to buy back 5 billion francs of its debt to reduce its financing costs.

“The bank’s performance reflects the effects of the challenging operating environment during the year, the costs involved in reshaping the business and the actions we took to address the challenges we faced,” the bank chairman, Axel Weber, and the chief executive, Sergio P. Ermotti, wrote in a letter to shareholders. “While progress was made on many issues during 2012, many of the underlying challenges remain at the start of the new year.”

Since taking the helm of UBS in 2011, Mr. Ermotti has been seeking to reduce costs by eliminating jobs, shrinking capital-intensive trading operations and repairing the bank’s reputation after a string of scandals.

In December, the bank agreed to pay $1.5 billion in fines for its role in a scheme that involved other banks and brokers to manipulate the London interbank offered rate, or Libor, and other benchmark interest rates. The settlement came after an earlier fine for charges it had helped some clients avoid United States taxes.

In October, UBS began eliminating about 10,000 jobs as it retreated from some business lines to focus more on its successful wealth management operation. Its investment banking operation was hurt in 2011 by a $2.3 billion trading scandal that cost the job of the chief executive at the time, Oswald Grübel.

The bank said on Tuesday that it “remains on track” with plans to reduce exposure to risky assets and cut costs. UBS said it had achieved 1.4 billion francs in net cost savings since the revamp started in mid-2011. As a result, it plans to increase its dividend payout for 2012 by 50 percent, to 0.15 francs a share.

UBS also announced it would change the way it pays bonuses to link them closer to the firm’s performance. Bankers would have to give up deferred compensation if the bank’s capital ratio fell under a certain level.

The investment banking unit had a pretax loss of 557 million francs in the last three months of 2012 compared with a profit of 114 million francs in the period a year earlier.

UBS’s wealth management unit reported that net new money inflows declined to 2.4 billion francs from 3.1 billion francs in the fourth quarter of 2011, after Western European clients withdrew funds amid the crisis in the euro zone.

Article source: http://dealbook.nytimes.com/2013/02/05/ubs-posts-2-billion-loss-on-libor-fines/?partner=rss&emc=rss

Nike Profit Up 3 Percent in 2Q

PORTLAND, Ore. (AP) — Nike Inc.’s second-quarter profit rose 3 percent as strong demand and higher prices for its shoes, clothes and gear offset increased costs.

Nike, like many companies, has been coping with higher costs for materials, labor and freight. But the Beaverton, Ore., company has been able to defy many trends of the down economy as its popularity has driven strong sales and allowed it to raise prices without consumer backlash.

The world’s largest athletic shoe and clothing company reported Tuesday after the market closed that it earned $469 million, or $1 per share, for the quarter that ended Nov. 30. That’s up from $457 million, or 94 cents per share, in the same quarter last year.

Nike’s total revenue increased 18 percent to $5.73 billion.

Results beat analysts’ expectations for the quarter of 97 cents per share on revenue of $5.63 billion, according to FactSet.

“Nike Inc. portfolio is a powerful engine for growth,” Mark Parker, President and CEO of Nike, said in a statement. “We’re able to accomplish this by staying focused on what we do best – deliver innovative products and experiences that serve athletes, inspire consumers and reward our shareholders.”

The company said revenue from sales of Nike brand products increased in every market around the globe, except Japan, which has long been a soft spot in its sales. The company’s other business lines were buoyed by strong sales at Converse, which more than offset lower revenue from Nike Golf, Cole Haan, Hurley and Umbro brands.

Nike also said that orders for items that were scheduled to be delivered between December and April rose 13 percent by comparison to the same period last year. Investors keep a close eye on this measure as an indicator of Nike’s potential performance for the upcoming period as the company does not give formal earnings guidance.

Shares of the Beaverton, Ore.-based company rose $1.20 to $94.83 in after-hours trading.

Article source: http://feeds.nytimes.com/click.phdo?i=bab5100331a634bf71e07ad5414a8814

Square Feet | The 30-Minute Interview: John T. Livingston

Q It’s been a year since the acquisition. What changes have been made so far?

A I like to say that in one day we went global. Tishman was a New York-centric construction services firm, and through the merger with Aecom, we became global, with access to people in 125 countries, 400 offices and all kinds of business lines.

So it’s a much bigger platform now, and the changes are corporate and administrative. At the day-to-day level it’s the same company and we do the same thing: we build for clients all over the U.S. No one has left or resigned, and there were no layoffs.

Q The Tishman name won’t disappear, right?

A Yes, it will stay. Dan Tishman is incredibly well known in the business, and he’s our icon.

Q What is Dan’s role now?

A Dan is on the board and the vice chairman of the parent company. He also remains the chairman and C.E.O. of Tishman Construction. His role is a more strategic role, and more with new clients and corporate relationships.

Mine’s more day-to-day of the business affairs of the company.

Q You started at Tishman in 1994.

A I have a real estate development background, and when I came here, we set up Tishman Urban Development Corporation. I was the first — and I think only — president and C.O.O. of that company. It was an internal company that provided development management services to Tishman on the real estate side. About nine years ago Dan asked me to move over to the construction company; I came on as the president.

Q How is business?

A We’re beginning to feel that things are getting better. And some of the evidence of that is that some very significant projects in the last few months have restarted. One is called Revel, a large casino in Atlantic City. The other is the International Gem Tower in the Diamond District. They started a number of years ago; each stopped for about 18 months and started up again in the last six months.

Q How many projects is Tishman working on now?

A We’re doing about 125 projects — that’s Tishman — and primarily in this country.

Q What’s the breakdown between public and private projects?

A It’s pretty straightforward: you follow the money. If the money is in private-sector work, that’s where you are; and if the debt is harder to get, you follow the public-sector money. Today it’s 40 to 50 percent public, and around 50 percent private, where historically it had been 20 percent public.

Q You’re working on public and private projects at ground zero.

A We’re doing most of the work at ground zero. We built the original World Trade Center, which was John Tishman’s legacy, Dan’s father, and we built the original 7 World Trade Center that collapsed after the Trade Center collapsed. One World Trade Center is past the 74th floor the last time I checked; No. 4 is past the 33rd; No. 3 we’re building it up to grade, and about 80 percent of the steel has been sent over to the PATH Hall — the Calatrava-designed birdlike structure.

Q Has One World Trade Center been difficult for you?

A It’s a very complex building because: A) the sheer size of it; B) where it sits, which is basically on a postage-stamp location and it goes straight up; and C) there’s so much happening around and under it, including the PATH, the subway and the retail. You don’t see all this, but all this gets brought to grade, so it’s a very complicated piece of work. That’s why it’s taken the time it’s taken to figure all these things out. You’re putting so many pieces together — all under the view of the public that says, “Why can’t you finish it tomorrow?”

Q Tishman has also done work for Hudson Yards in Midtown.

A We did a little bit of work for Related on Hudson Yards, and we hope that will continue. We did a lot of preconstruction for almost five years. We’re helping them figure out what will get built.

Q Do you have a favorite project?

A I like the Plaza Hotel, because I was married there. When we first went in and started the renovation there, I tried to find the room that we stayed in and the ballroom that’s no longer there that we got married in.

Everybody knew how pretty it was from the outside, but they didn’t know how tired it was on the inside.

Article source: http://feeds.nytimes.com/click.phdo?i=7e5568e7867020e85d0b86af662baa5a

DealBook: Blogging Morgan Stanley’s Annual Meeting

Morgan Stanley

There was no shortage of good topics on which shareholders can grill Morgan Stanley’s chief executive, James P. Gorman, at the firm’s annual meeting on Wednesday in Purchase, N.Y.

Mr. Gorman’s campaign to rebuild Morgan Stanley has been slow-going.

He has made some progress repairing crucial business lines. In April, he renegotiated a deal governing an expensive lifeline the firm took to bolster its balance sheet during the financial crisis.

But the firm’s stock, currently trading at about $24 a share, continues to struggle. It is 10 percent lower than when shareholders gathered for last year’s annual meeting.

DealBook was on hand for the meeting, which was held this morning. What follows is a blog of the event.

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Article source: http://feeds.nytimes.com/click.phdo?i=4e9d42c42497150e447df04add0f38c6