Thursday, January 19, 2012

Eastman Kodak files for bankruptcy protection

19 January 2012 Last updated at 13:59 GMT

Steven Sasson with his prototype digital camera.

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Eastman Kodak, the company that invented the hand-held camera, has filed for bankruptcy protection.
The move gives the company time to reorganise itself without facing its creditors, and Kodak said that it would mean business as normal for customers.
The company has recently moved away from cameras to refocus on making printers, to stem falling profits.
The 133-year-old firm has struggled to keep up with competitors who were quicker to adapt to the digital era.
"Kodak made all its money from selling film, then the digital camera came along and now no-one's buying film. It's not like they didn't see it coming. Kodak hesitated because they didn't want to eviscerate their business," said Rupert Goodwins, editor of technology website ZDNet.
Announcing the move to seek bankruptcy protection, Antonio Perez, Kodak's chairman and chief executive, said: "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."
The company said it had already arranged a $950m (£615m) credit facility from Citigroup.
The bankruptcy protection move by Kodak affects its operations and companies in the US, but the company said its non-US subsidiaries were not included in the move and would continue to operate as usual.

Kodak moments

Kodak box camera 1950
  • Kodak founder George Eastman produced the first camera film in rolls in 1883
  • The firm Kodak is set up in 1888 and launches the first consumer camera in 1888 with the slogan: "You press the button, we do the rest"
  • In 1900 Kodak introduces a consumer camera for $1 called the Brownie, which goes on to become a best-seller in America
  • In 1969 a Kodak camera is used by astronauts Buzz Aldrin and Neil Armstrong during the first Moon landing
  • Kodak claims to have invented the world's first digital camera in 1975. It had a resolution of 0.1 megapixels; the camera was the size of a toaster
Earlier this month, the New York Stock Exchange told Kodak that it could be delisted from the exchange if it could not get its stock price back above $1.00 per share.
Kodak fell out of the Dow Jones Industrial Average of 30 top US companies in 2004.
Since becoming chief executive, Mr Perez has been responsible for steering Kodak away from its traditional market in cameras to focus on home and commercial printers.
However, the firm has failed to stop its plunging profitability.
The firm said earlier this year that it was pinning its hopes on its printer, software and packaging businesses, with the aim of expanding them to account for 25% of its income by 2013.
It reorganised its business units into two rather than three, renaming them consumer and commercial.
"Even though film and developing is a dead business, there is still money to be made in ink and other supplies," technology commentator Larry Magib told BBC World.
Rupert Goodwins, ZD Net UK: "They knew what was happening, but they didn't have the guts to move with it"
"But Hewlett Packard, Canon and Epson have those markets. Kodak does have printers, but it has not been able to succeed in making money from them," he said.
The move to seek bankruptcy protection comes after Kodak failed to sell its catalogue of digital imaging patents last year. At the time, Kodak warned that it would run out of cash if it did not find a buyer by the end of 2011.
"Now we must complete the transformation by further addressing our cost structure and effectively monetising non-core IP assets," said Mr Perez on Thursday.
Former Kodak vice president Don Strickland insists the firm's late entry into the digital market is a key factor in its recent troubles. He claims he left the company in 1993 after he failed to get backing from within the company to release a digital camera.
"We developed the world's first consumer digital camera and Kodak could have launched it in 1992.
Crisis jargon buster
Use the dropdown for easy-to-understand explanations of key financial terms:
Chapter 11
The term for bankruptcy protection in the US. It postpones a company's obligations to its creditors, giving it time to reorganise its debts or sell parts of the business, for example.
"We could not get approval to launch or sell it because of fear of the cannibalisation of film," he told BBC News.
Although Kodak was one of the original inventors of digital photography, it failed to keep pace with developments in the market and competitors including Fuji steadily eroded its share of the market.
Since 2003, Kodak has closed down 12 manufacturing plants.
Mr Strickland believes the firm has little chance of surviving long term.
"There will be no more 'Kodak moments' - after 133 years, the company has run its course."
Kodak employs 19,000 workers, but it is not known how many may be affected by the reorganisation.
In its 1980s heyday, the company employed 145,000 people in locations throughout the world.
What are your earliest memories of Kodak? Have you worked for Kodak? Share your Kodak moments with us today with your photos or anecdotes.
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