Who Are the Next Kodaks?

Joel Anderson |

Kodak HeadquartersEastman Kodak (EKDKQ) was once a thriving, innovative company that had the world in the palm of its hand. Kodak traces its history to 1889 and once commanded as much as 90 percent of the American market for film and 85 percent of film cameras. It was one of the most recognizable brands in the entire world.

That was then. Now, Eastman Kodak has filed for chapter 11 bankruptcy protection, laying low this once mighty giant. The digital camera has rendered celluloid film obsolete and Kodak with it. This begs the question: which giants of today might be 50 years from fading away? The answer to this question is obviously pure speculation, and there can be no certainty about the answer. The very idea that Kodak might go bankrupt would have been an anathema some 40 years ago, and plenty of companies with outlooks not nearly as healthy as Kodak had at the time have gone on to thrive. Granted, Kodak had the distinct honor of creating the method of its own demise (the digital camera was actually first developed by Kodak's own engineers), but the possibility that a new technology might destroy a business empire is always looming. So, in the name of pure (PURE) speculation, here's a look at some major blue-chip companies and how they might ultimately go the same way Eastman Kodak did.

Retailers That Could Go Under

Okay, so this one might be something of a softball. The decline of brick and mortar retailers as more and more people buy from online retailers like Amazon (AMZN) and eBay (EBAY) appears, at this point, to be almost inevitable. However, while the death (or at least decline) of megastores like Best Buy (BBY) or Kohl's (KSS) over the next few decades seems fairly likely at this point, how will this affect Wal-Mart (WMT)? The mega-retailer is currently the number nine company in the world by market cap and continues to show the potential for growth as it expands into global markets. Can Wal-Mart find a way to continue drawing people to its stores even as business shifts online?  The Arkansas-based company most likely has at least a couple decades to work the issue out, but only time will tell.

Fossil Fuels Out of Gas

This is where one begins to get into the much broader long-term speculation. However, the science surrounding global warming is pretty clear, and it appears certain that, one way or another, mankind will have to start using less oil, goal, and natural gas over the course of the next century. In the near future, major oil companies take up five of the top 10 spots for largest overall market cap (PetroChina (PTR), Royal Dutch Shell (RDS-B), Chevron (CVX)Petroleo Brasileiro (PBR), and Exxon Mobil (XOM), which is still number one after holding off Apple's (AAPL) after Wednesday's rally), and the burgeoning middle classes in India and China should guarantee that global demand for fossil fuels will be on the rise for at least another decade or two.

However, how global warming will affect the planet and how humanity will react to this makes the picture a bit murkier once one looks 50 or more years down the road.  With massive stockpiles of cash, it's certainly possible (if not incredibly likely) that these companies will be able to adapt to the world's changing energy needs, but it also seems as though gasoline could easily become the next celluloid film if one looks far enough down the road.

Television Tuning Out

Much like retailers, the traditional television networks and content creators have had their business models shaken to the core by the advent of the internet.  And, much like retailers, this might be a relative softball.  However, the idea that television networks and movie studios will continue to make money in precisely the same way fifty years from now appears unlikely at this point. With Apple and Google (GOOG) now offering competing platforms that meld traditional television with internet video, the way people get their entertainment is bound to change. The unmitigated success of comedian Louis C.K.'s efforts to sell his stand-up special directly to consumers via the internet should serve as further proof that the internet allows for more direct access to consumers and might end up killing off the middle men who used to be able to profit from controlling that access.  ABC and NBC are both owned by larger corporations, Disney (DIS) and Comcast (CMCSA) respectively, and could continue to have value even if operating at a loss. However, CBS (CBS), the sole remaining pure-play television network, relies on its ad revenues alone to survive.  Should those continue to dry up over the next few decades, it will be interesting to see if the storied home of Walter Cronkite et al can continue on.

The Next Eastman Kodak will be...

...impossible to identify. In some ways, the very fact that the companies above have been highlighted in this article could be a reason why they won't be the next Kodak. The fact that their long-term issues can at least be identified means that they can be responded to, and the total lack of capacity to predict the way Kodak would decline was precisely what makes it notable. Even seemingly invincible, growing companies like Google, Apple, or Amazon could be a few decades from obsolescence, there's just no way one would know it yet. As such, Eastman Kodak should remain a cautionary tale for all to remember: no matter how impossible it seems, the rug can be pulled out from under almost any market.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CBS CBS Corporation Class B 61.23 0.24 0.39 2,983,670
CVX Chevron Corporation 113.15 -0.11 -0.09 3,750,355
PBR PETROLEO BRASILEIIRO SA PETROBRAS 10.89 0.44 4.21 31,918,847
WMT Wal-Mart Stores Inc. 70.26 0.32 0.46 5,630,103
WEQ.DB.C:CA WesternOne Inc. 8% Extendible Converted Series 2 S n/a n/a n/a 0
EBAY eBay Inc. 28.17 -0.19 -0.65 6,410,344
AAPL Apple Inc. 109.69 0.58 0.53 19,382,382
AMZN Amazon.com Inc. 763.64 4.28 0.56 3,200,507
DIS Walt Disney Company (The) 100.52 0.56 0.56 5,600,925
PTR PetroChina Company Limited 70.92 0.02 0.03 48,991
KSS Kohl\'s Corporation 55.30 0.79 1.45 2,910,349
BBY Best Buy Co. Inc. 46.85 0.31 0.67 3,967,093
XOM Exxon Mobil Corporation 87.76 0.28 0.31 7,614,519
CMCSA Comcast Corporation Class A Common Stock 68.69 0.01 0.01 7,049,287

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