Eastman Kodak Overhauled for the Future (NYSE:EK)

Eastman Kodak Company (NYSE:EK) has long been a household name.  If you are like me, you remember Kodak as being the dominant camera and film producer before digital exploded on the scene.  But that was many years ago and we have seen this stock fall from over $80 per share down to current level of $6 per share.  It may high time for this one to turn around.

Over at A-V Capital Management, founder and portfolio manager Cary J. Amann is betting that it is turnaround time for Eastman Kodak.  He says, “Eastman Kodak (EK) is currently my highest conviction long position. Eastman Kodak is one of the legendary names in American business. The company was founded in 1880 and is headquartered in Rochester, New York. For many years, the name Kodak was practically synonymous with all things photographic, including cameras and the film used in them.

The explosion in digital photography has presented the company with strategic challenges in recent years, and EK is completing a four‐year $3.4 billion restructuring program that has seen its focus shift away from the traditional film photography markets towards the digital photography and electronic device markets.

EK is a pure bottom-up pick from our perspective. We view it as a classic turnaround story. Current sentiment on the stock remains cautious at best, which we see as a positive, given the potential for upside surprises as the company executes its strategy. Beginning in January 2004, the company initiated a cost reduction program that has grown in size and scope over the years. All said, about 28,000 jobs have been cut and total charges of about $3.4 billion taken.

In 2007, when the company sold its Health Care Group for $2.35 billion and used nearly half of that amount to pay down a secured term debt, it signaled an important shift, both in its strategic refocus on its three core businesses -- Consumer Digital Imaging, Film Products, and Graphic Communications -- and in its efforts to restructure its balance sheet.“

Read why Amann thinks EK has repositioned itself in the digital space.