Yesterday was Kodak’s annual analyst day and the New York Times seized the opportunity to discuss the progress made in the last few years as the company transitions from a film-focused business to a digital one. In light of disappointing newspaper industry and print directory news, it’s heartening to look at the new opportunities Kodak is seeing in the market.

But to hear Mr. Faraci (Kodak’s president) tell it, the factors that are hurting newspaper publishers in the United States — the migration of advertising and readers to the Internet tops the list — are not having the same impact overseas. “Literacy is growing through the world,’’ he said, noting that it is encouraging more newspaper readership in developing countries.

And even in the United States, he said, Kodak is benefiting from the moves that some publishers are making to recoup at least some of those lost advertising dollars. He notes that The Chicago Tribune and some others are trying “microzoning” — printing several versions of the paper in the same city, each with ads aimed at a specific neighborhood. And, he said, newspapers all over are using more color.

All of that, he said, promises to yield increased sales of Kodak’s high-speed production printers — particularly of the 1,600-page-per-minute printer Kodak is about to introduce. And far more important to the company, the trend can yield a steady stream of orders for inks and other highly profitable consumables.

As Mathew Ingram says regarding the newspaper industry, “… just because newspapers aren’t doing well doesn’t mean that journalism or media or the news business itself isn’t doing well. If anything, people are searching for more and more news all the time. They’re just doing it online instead of on paper.”

Now, going back to the Yell Group news that made their stock price fall 18% this week. The Guardian has more details:

John Condron, chief executive, said the problems in the market came to light as Yell’s sales teams put together about 20 directories, out of 102 it produces across the country, to be published in January, February and March. “I think UK plc, as far as our company is concerned, came back after Christmas and took a very cautious, very conservative view of the future. We seem to have replaced the regulatory pressure on us with recessionary pressures,” he said. “But it is important that we all realise that customers are staying with us and renewing with us, they are just not increasing expenditure.” Under its current regulatory regime, Yell cannot increase Yellow Pages prices by more than inflation minus 6%, which in effect means it must cut rates every year. From April, Yell can increase rates in line with inflation. Its average planned price rise is inflation minus 1%.

Based on those explanations, I think that situation might be more cyclical (stock market nervousness, UK regulatory pressures, etc.) than structural, but it certainly serves as an early warning signal to directory publishers worldwide to get on board the digital train fast, and start re-inventing their business.

I leave the last few words to Charles Laughlin from the Kelsey Group as I fully endorse them:

Amid such a sharp sell off, it’s worth reiterating some truths about the directories business. Yes, print revenues are declining, but directories are still a highly valuable source of leads for small, local businesses. The directory industry remains hugely profitable. It seems to us that many investors got into directories based on an oversimplified story (lots of cash, visible revenue, stable customer base). And they seem to be leaving based on similar reasoning (no one uses Yellow Pages anymore, Google has made the medium obsolete, it won’t exist in five years, and so on). While search is a growing factor in local, search cannot yet replace the volume of leads available from printed directories, and it may be some time before it can. Directories will be a major player in local media for quite some time to come.