09 April 2017 Business

Kodak removes For Sale sign over Prosper inkjet business

Kodak has developed a new strategy for its Prosper inkjet division having failed to find a buyer willing to meet Kodak's valuation for the business.

Kodak has reversed its declared intention of selling its Prosper inkjet business, explaining that offers received “did not reflect the value of the business today”. “This was a pragmatic decision given the improvements and the offers received,” says Kodak CEO Jeff Clarke.

In short, revenues in the Prosper business have picked up sharply and it is projected to be at breakeven at least for the financial year. “Excluding Ultrastream, Prosper will be profitable this year,” says Philip Cullimore, president of the enterprise inkjet systems division.

And while Ultrastream remains a development project, interest in the capabilities of the simple, competitively priced high quality and high speed print head has been higher than hoped. Kodak plans to ship development kits to more than 17 companies before the end of the year.

However the move has not been without casualties. Cullimore, who has been president of Kodak's enterprise inkjet systems division, is stepping down to take an extended sabbatical. “You really need to be in the middle of the R&D and manufacturing operations,” he says, “I did my best but I am living 3,000 miles from HQ which is tough on the constitution.”

In the last year there has been the addition burden of meeting prospective buyers from Japan, the Far East, Europe and North America to add to the regular transatlantic flights.

He is succeeded by Randy Vandagriff who has been part of the Dayton team developing the continuous inkjet technology for more than 35 years. He will lead a different style of business than that prior to the decision to sell Prosper.

Going forwards the business will be focused on indirect sales, working with OEM partners to include Prosper and Ultrastream print heads in their presses and production lines rather than selling Prosper presses through Kodak channels. This requires investment in a sales team and support engineers which the post-Chapter 11 Kodak could not justify.

“We will continue to sell a place Prosper presses, says Vandagriff. “The Prosper 6000 is a robust, reliable product for running 20-25 million pages a month, for people running those volumes or for lower volumes with higher ink coverage.”

This model has helped push annuity revenues from inks and replacement heads up 40% in 2016 with further growth forecast for this year.

And while the presses represent a huge number of heads compared to batches to three or four sold at a time, Kodak's sales force for this will become much leaner. Presses will be installed for specific applications “where the customer can make money and where we can make money” says Cullimore. It sold 16 machines last year he adds. “There is a shift from a direct sales organisation with a few OEM sales to one focused on OEM sales with a smaller direct business.”

A further requirement of the former approach has been a commercial finance partner willing to fund investments, which had proved difficult with a new technology. Working with a limited number of OEMs with deeper pockets solves this problem.

The Ultrastream project has always been about OEMs fitting print heads to existing substrate transport systems, either paper or increasingly in printing films for packaging. As a consequence evaluation kits will this year be supplier to at least 17 companies. Those named include Fuji Kikai, Goss China, Matti, Uteco and Mitsubishi Heavy Industries.

Should these companies extend their initial interest, first products could become available in 2018. These will offer high speed at high quality, a combination that Kodak believes no other supplier can yet match. For Vandagriff this means that Ultrastream can attack shorter run lengths, around 5,000 sheets that litho has been producing. “Even with Prosper we have the lowest total cost of printing, which opens up access to these sorts of runs,” says Vandagriff.

The Ultrastream was unveiled at Drupa last year and the development kits were shown at Hunkeler earlier this year. At the Lucerne event Kodak focused on hybrid application where its technology is used alongside litho or flexo printing and on packaging as much as commercial printing.

Ultrastream will be the focus for R&D investments. A separate team will maintain Prosper and work with its set of OEMs, but with three heads in the market, there is unlikely to be a second or third generation. By contract Kodak has mapped the features for the second and third generation Ultrastream heads.

The process began with the announcement that Sagent Advisors had been appointed to manage a sales process. The operation was taken off the balance sheet as a discontinued operation. Now it returns to the fold.

“It has been a very worthwhile exercise,” says Cullimore. “It has focused us on looking at what we want the business to be.”

Gareth Ward

« »
Prosper 6000

Prosper 6000

Kodak has decided to retain its Prosper business, having earlier decided it could not support the technology in the way that was deemed necessary. But with a change in strategy, and the lack of a buyer will to meet Kodak's expectations, Prosper now returns to the fold as a soon to be profitable business.

Explore more...

2016: Kodak hopes sale will net significant realisation

2016: Kodak plans to bow out of inkjet

Lettershop takes inkjet to the next level

Posting a comment

Please feel free to leave a comment on this post, we require all posts to be screened before they are set live. We will send you a notification when your comment is approved.

Turing Test

No comments to display, be the first! Leave a comment in the box above.