The leaner post-bankruptcy Kodak faces an uphill battle
A celebrated company whose little yellow packages of film documented generations of birthday parties, weddings and anniversaries, the new Kodak will be more commercially focused, providing printing and imaging services to businesses as well as film to the movie industry.
Consumers will probably still be able to find Kodak-brand film and digital cameras, and they will still be able to download and print their digital pictures at kiosks.
Those businesses will no longer be owned by Kodak, however. As part of the more than year-long bankruptcy process, they were sold to others.
Antonio Perez, Kodak's oft-criticised chief executive, who has been trying to stage a turnaround of the company since 2005 and has overseen it through bankruptcy proceedings, said in a news release last week that the company was positioned for a "profitable and sustainable future".
Some sceptics sounded warnings, though, noting that certain commercial businesses that the company is banking on are fiercely competitive and that Kodak's own projections show steep declines in growth in other business lines.
"The company made a big mistake of riding the cash cow — film — to the point that there was simply no more milk coming from it," said George Conboy, chairman of Brighton Securities in Rochester, where the company's predecessor was founded in 1881.
Kodak cleared a big hurdle last week when it said it would spin off two businesses to the Kodak Pension Plan in Britain for $US650 million in cash and debt. The agreement still needs court approval.
The segments that were sold include document imaging and the business that made Kodak a household name, its camera film and photographic paper lines.
The bankruptcy process hit a major snag last year, however, when the company struggled to sell what it considered to be a crown jewel — a package of 1100 digital imaging patents.
Kodak had hoped the patents would go for as much as $US2.6 billion, but a consortium of buyers that included some of the world's largest technology companies — such as Apple, Google and Facebook — bought them in December for far less, about $US527 million.
"What that situation signified — which was part of the problem with the whole business model — is that they thought their technology and their patents were more valuable than they really were," said Jay Westbrook, a professor at the University of Texas Law School.
Frequently Asked Questions about this Article…
Kodak is expected to emerge from bankruptcy in the summer or fall. For investors, that means the company will re-emerge much smaller and more narrowly focused — no longer the old corporate giant but a leaner business concentrated on commercial printing and imaging services and supplying film to the movie industry.
After bankruptcy Kodak will be more commercially focused: providing printing and imaging services to businesses and film for the movie industry. Many consumer-facing product lines (like film and cameras) were sold to other owners during the bankruptcy process, so Kodak itself will be a different, smaller company.
Yes — consumers will probably still find Kodak-brand film, digital cameras and kiosks to download and print pictures. However, those consumer businesses were sold to other companies during bankruptcy and will no longer be owned by Kodak.
Kodak sold several segments including its document imaging business and the consumer camera film and photographic paper lines. Some businesses were spun off as part of restructuring and sales over the year-long bankruptcy process.
Kodak struggled to sell a package of about 1,100 digital imaging patents that it considered a crown jewel. In December a consortium that included major technology companies such as Apple, Google and Facebook bought the patents for about $US527 million — far less than Kodak's earlier hoped-for price.
Kodak agreed to spin off two businesses to the Kodak Pension Plan in Britain for $US650 million in cash and debt. That agreement still requires court approval as part of the bankruptcy process.
Sceptics point out that the commercial markets Kodak is banking on are fiercely competitive, and Kodak's own projections show steep declines in growth in other lines. Critics also argue Kodak relied too long on its film 'cash cow' and overvalued its technology and patents, which raises questions about the sustainability of the turnaround.
CEO Antonio Perez, who has led efforts to turn Kodak around since 2005 and overseen the bankruptcy proceedings, says the company is positioned for a 'profitable and sustainable future.' Some industry observers remain sceptical, however, about Kodak's prospects in competitive commercial markets.
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