Kodak quits the camera business

It's the end of an era: Kodak will stop making digital cameras, camcorders, and digital picture frames and be out of the photography business by the middle of the year.



Kodak has announced it plans to stop making digital cameras, camcorders, and digital picture frames, phasing out the products by the middle of the year. The move marks the end of an era for Kodak, taking the company out of the photography business it virtually defined during the 20th century. Kodak is currently in bankruptcy protection; it says it plans to seek out partners to license the Kodak brand for other products, and the company will still offer photo printing, desktop inkjet, and online/software services printers directly to consumers.

“For some time, Kodak’s strategy has been to improve margins in the capture device business by narrowing our participation in terms of product portfolio, geographies, and retail outlets,” said Kodak’s chief marketing officer Pradeep Jotwani, in a statement. “Today’s announcement is the logical extension of that process, given our analysis of the industry trends.”

Kodak says it will work with retailers to ensure a smooth transition, and the company will honor service and warranty agreements for its existing products.

For Kodak, the decision is all about trying to improve the company’s bottom line and create a sustainable business. Kodak has already sold off major segments of its operations, and (after suing the likes of Apple, RIM, and HTC) is looking to sell some of its substantial patent portfolio to raise cash.

Kodak says getting out of the camera business will save as much as $100 million a year, although it will incur a charge of about $30 million to make the change. The company has not said how many jobs it expects to cut.

Kodak was founded by George Eastman all the way back in 1880, and became world-famous for its Brownie and Instamatic cameras that were among the first products to bring photography to everyday people. However, despite literally inventing the digital camera (Kodak engineer Steve Sasson built the first camera to use a CCD at Kodak back in 1975) and building some of the first consumer digital cameras to come to market (Apple’s early QuickTake cameras were built by Kodak), the company had difficulty competing with Japanese camera makers back in the days of film, and never managed to successfully transition its business to digital imaging.

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Kodak officially files for bankruptcy protection

Kodak and its U.S. subsidiaries filed voluntary petitions for Chapter 11 bankruptcy on Thursday. The petition was filed in the Bankruptcy Court for the Southern District of New York. During the bankruptcy, Kodak hopes to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, resolve legacy liabilities and focus on its most valuable business lines. ”Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees,” said the company in a press release. “We are also committed to working with our valued customers.”  Kodak received $950 million in debtor-in-possession financing, which the company said should provide the assets needed to continue operations during the restructuring. “We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company,” said chairman and CEO Antonio Perez. Read on for Kodak’s press release.

Eastman Kodak Company and Its U.S. Subsidiaries Commence Voluntary Chapter 11 Business Reorganization
Flow of Goods and Services to Customers to Continue Globally in Ordinary Course
Non-U.S. Subsidiaries Are Not Included in U.S. Filing and Are Not Subject to Court Supervision
Company Secures $950 million in Debtor-in-Possession Financing in U.S.
Kodak’s Reorganization to Facilitate Emergence as Profitable and Sustainable Enterprise
ROCHESTER, N.Y.–(BUSINESS WIRE)–Eastman Kodak Company (“Kodak” or the “Company”) announced today that it and its U.S. subsidiaries filed voluntary petitions for chapter 11 business reorganization in the U.S. Bankruptcy Court for the Southern District of New York.
“Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.”
The business reorganization is intended to bolster liquidity in the U.S. and abroad, monetize non-strategic intellectual property, fairly resolve legacy liabilities, and enable the Company to focus on its most valuable business lines. The Company has made pioneering investments in digital and materials deposition technologies in recent years, generating approximately 75% of its revenue from digital businesses in 2011.
Kodak has obtained a fully-committed, $950 million debtor-in-possession credit facility with an 18-month maturity from Citigroup to enhance liquidity and working capital. The credit facility is subject to Court approval and other conditions precedent. The Company believes that it has sufficient liquidity to operate its business during chapter 11, and to continue the flow of goods and services to its customers in the ordinary course.
Kodak expects to pay employee wages and benefits and continue customer programs. Subsidiaries outside of the U.S. are not subject to proceedings and will honor all obligations to suppliers, whenever incurred. Kodak and its U.S. subsidiaries will honor all post-petition obligations to suppliers in the ordinary course.
“Kodak is taking a significant step toward enabling our enterprise to complete its transformation,” said Antonio M. Perez, Chairman and Chief Executive Officer. “At the same time as we have created our digital business, we have also already effectively exited certain traditional operations, closing 13 manufacturing plants and 130 processing labs, and reducing our workforce by 47,000 since 2003. Now we must complete the transformation by further addressing our cost structure and effectively monetizing non-core IP assets. We look forward to working with our stakeholders to emerge a lean, world-class, digital imaging and materials science company.”
“After considering the advantages of chapter 11 at this time, the Board of Directors and the entire senior management team unanimously believe that this is a necessary step and the right thing to do for the future of Kodak,” Mr. Perez continued. “Our goal is to maximize value for stakeholders, including our employees, retirees, creditors, and pension trustees. We are also committed to working with our valued customers.
“Chapter 11 gives us the best opportunities to maximize the value in two critical parts of our technology portfolio: our digital capture patents, which are essential for a wide range of mobile and other consumer electronic devices that capture digital images and have generated over $3 billion of licensing revenues since 2003; and our breakthrough printing and deposition technologies, which give Kodak a competitive advantage in our growing digital businesses.”
Mr. Perez concluded, “The Board of Directors, the senior management team and I would like to underscore our appreciation for the hard work and loyalty of our employees. Kodak exemplifies a culture of collaboration and innovation. Our employees embody that culture and are essential to our future success.”
Kodak has taken this step after preliminary discussions with key constituencies and intends to work toward a consensual reorganization in the best interests of its stakeholders. Kodak expects to complete its U.S.-based restructuring during 2013.
The Company and its Board of Directors are being advised by Lazard, FTI Consulting Inc. and Sullivan & Cromwell LLP. In addition, Dominic DiNapoli, Vice Chairman of FTI Consulting, will serve as Chief Restructuring Officer to support the management team as to restructuring matters during the chapter 11 case.
More information about Kodak’s Chapter 11 filing is available on the Internet at www.kodaktransforms.com. Information for suppliers and vendors is available at (800) 544-7009 or (585) 724-6100.
Kodak will be filing monthly operating reports with the Bankruptcy Court and also plans to post these monthly operating reports on the Investor Relations section of Kodak.com. The Company will continue to file quarterly and annual reports with the Securities and Exchange Commission, which will also be available in the Investor Relations section of Kodak.com.

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