On Sun, 26 Sep 2004 06:44:06 -0500, Nick Zentena
wrote:

Ron Todd wrote:


Cost - Volume - Gross Profit functions are not that simple.
Sometimes, you can make a higher gross profit by lowering the price.

The problem is the fixed costs don't change any if they make 1 roll or
they make 1,000,000. Worse the equipment isn't likely able to handle small
production runs. They need volume not just for profit but to keep the
machines running.

Actually, fixed costs do change over large ranges in production
volume, as you can dump some of the costs as the enterprise contracts.
Many fixed costs are actually semi fixed costs over the wide range of
production volumes. I understand Kodak has liquidated some of its
fixed costs on continuing lines already, as film volume has declined.
I am pretty sure the fixed cost to produce one square foot of film is
much lower than the cost to produce 1 million square feet. You could
do 1 square foot in the basement, the 1 million would take some
administrative costs to run the operation.

I agree that Kodak's equipment is designed for higher production runs.
As I understand it: The TP and Kodachrome 25 production both ended
when they got down to one emulsion run a year, or less in the case of
TP. With the TP it seems the last production run was enough for three
years with the current demand.




(liquidators) come in. You get to the point where the money to be
recovered from liquidating the company (and firing all the employees)
becomes a very reasonable possibility.


If nobody is buying film then the equipment is worthless. The cleanup
costs likely are higher then the other assets. The only way somebody can
make money by breaking up the company is if the assets have some value.

Not necessarily. You never know what the assets are worth until you
sell them in the open market. People are notoriously bad at coming up
with pre-liquidation valuations. AIR, Rolls Royce was valued at
something like $0.10 per share before the liquidation. I believe it
returned something like $1.00 to $1.25 per share to equity holders.