20th Jan 12
Kodak files for bankruptcy
by Natasha Redman
Black and white: Kodak didn't move quickly enough into digital age
Black and white: Kodak didn't move quickly enough into digital age
Eastman Kodak, the inventor of the hand-held camera, has filed for bankruptcy protection in a bid to survive.
The move gives the firm time to reorganise without having to face its creditors. The company confirmed that business would carry on as normal for customers. Kodak has moved away from cameras recently to refocus on producing printers in an effort to stem declining profits.
The 133-year-old company had found it difficult to keep up with rivals who adapted more quickly to the digital era. The firm’s chairman and chief executive Antonio Perez said upon announcing the bankruptcy protection move that the senior management team and the board of directors are unanimously of the opinion that this is the right move to ensure Kodak’s future. The company revealed that it had already secured a credit facility of $950m (£615m) from Citigroup.
The New York Stock Exchange informed Kodak earlier this month that it faced being delisted if it was unable to get the price of its stock back above $1.00 a share. In 2004 the company dropped out of the top 30 US companies on the Dow Jones Industrial Average.
Mr Perez, since becoming chief executive, has been responsible for guiding the company away from its traditional camera market in order to focus on commercial and home printers. However, Kodak has been unable to halt its plunging profitability.
Earlier this year the firm said that its hopes were pinned towards its printer, packaging and software businesses, with the target of expanding them so they make up 25 per cent of its total income by next year. In addition, it reshuffled its business units, putting them into two instead of three, renaming them commercial and consumer.
The move for bankruptcy protection comes after the company failed to sell its digital imaging patents in 2011. At the time, the firm warned that it was likely to run out of money if it could not find a buyer for the catalogue by the end of last year. Mr Perez said that they now need to complete the transformation by addressing their cost structure again.
Don Strickland, the former vice president of Kodak, insists that the fact that the company entered the digital market later than rivals is one of the main factors of its recent troubles. He said that he left the firm in 1993 after being refused backing from within Kodak to launch a digital camera.
Although Kodak was among the original front runners of the digital camera era, it could not keep up with developments across the market and rivals including Fuji gradually eroded its market share. Since 2003, the company has shut 12 manufacturing plants down.
Kodak has 19,000 employees, but it remains unknown how many are likely to be impacted by the reorganisation.
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